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Y  l.l/2:Serial  13766 

United  States  Congressional... 



T  TO  w   r  \ 

"O  c  h  P\^ 





100th  Congress  —  1st  Session        •        January  6-December  22,  1987 

Senate  Report 

No.  216 



United  States  Congressional  Serial  Set 

Serial  Number  13766 

United  States  Government  Printing  Office 
Washington  :  1989 

Union  Calendar  No.  277 
100th  Congress,  1st  Session 
S.  Rept.  No.  100-216  H.  Rept.  No.  100-433 

Report  of  the  Congressional  Committees  Investigating  the 

Iran-Contra  Affair 

Appendix  B:  Volume  25 

Daniel  K.  Inouye,  Chairman, 
Senate  Select  Committee 

Lee  H.  Hamilton,  Chairman, 
House  Select  Committee 

U.S.  Senate  Select  Committee  U.S.  House  of  Representatives 

On  Secret  Military  Assistance  to  Iran  Select  Committee  to  Investigate 

And  the  Nicaraguan  Opposition  Covert  Arms  Transactions  with  Iran 

November  13,  1987.  -  Committed  to  the  Committee  of  the  Whole  House 

on  the  State  of  the  Union  and  ordered  to  be  printed. 

November  17,  1987.— Ordered  to  be  printed. 

Washington  :  1988 

Bnited  States  ^tnate 



WASHINGTON.  DC  20510-6480 

March    1,     1988 

Honorable  John  C.  Stennis 
President  pro  tempore 
United  States  Senate 
Washington,  D.C. 

Dear  Mr.  President: 

We  have  the  pleasure  to  transmit  herewith,  pursuant  to 
Senate  Resolution  23,  Appendix  B  to  the  final  Report  of  the 
Senate  Select  Committee  on  Secret  Military  Assistance  to  Iran 
and  the  Nicaraguan  Opposition.   We  will  submit  such  other  volumes 
of  Appendices  to  the  Report  as  are  authorized  and  as  they  become 


Warren  B.  Rudman    V^^ 
Vice  Chairman 







(202)  22S-7B02 

March   1,    1988 

The  Honorable  Jim  Wright 
Speaker  of  the  House 
U.  S.  Capitol 
Washington,  D.  C.  20515 

Dear  Mr .  Speaker : 

Pursuant  to  the  provisions  of  House  Resolutions  12  and 
330  and  House  Concurrent  Resolution  195,  100th  Congress,  1st 
Session,  I  transmit  herewith  Appendix  B  to  the  Report  of  the 
Congressional  Committees  Investigating  the  Iran-Contra  Affair, 
House  Report  No.  100-433,  100th  Congress,  1st  Session. 

Appendix  B  consists  of  the  depositions  taken  by  the 
Select  Committees  during  the  investigation.  The  contents  of 
Appendix  B  have  been  declassified  fq^-Yelease  to  the  public. 

Lee  H.  Hamilton 

United  States  Senate 

Select  Committee  on  Secret  Military  Assistance 
To  Iran  and  the  Nicaraguan  Opposition 

Daniel  K.  Inouye,  Hawaii,  Chairman 
Warren  Rudman,  New  Hampshire,  Vice  Chairman 

George  J.  Mitchell,  Maine 

Sam  Nunn,  Georgia 
Paul  S.  Sarbanes,  Maryland 
Howell  T.  Heflin,  Alabama 
David  L.  Boren,  Oklahoma 

James  A.  McClure,  Idaho 

Orrin  G.  Hatch,  Utah 

William  S.  Cohen,  Maine 

Paul  S.  Trible,  Jr.,  Virginia 

Arthur  L.  Liman 
Chief  Counsel 

Mark  A.  Belnick  Paul  Barbadoro 

Executive  Assistant  Deputy  Chief  Counsel 

To  the  Chief  Counsel 

Mary  Jane  Checchi 
Executive  Director 

Lance  I.  Morgan 
Press  Officer 


United  States  House  of  Representatives 

Select  Committee  to  Investigate  Covert  Arms 
Transactions  with  Iran 

Lee  H.  Hamilton,  Indiana,  Chairman 
Dante  B.  Fascell,  Florida,  Vice  Chairman 

Thomas  S.  Foley,  Washington 

Peter  W.  Rodino,  Jr.,  New  Jersey 

Jack  Brooks,  Texas 

Louis  Stokes,  Ohio 

Les  Aspin,  Wisconsin 

Edward  P.  Boland,  Massachusetts 

Ed  Jenkins,  Georgia 

Dick  Cheney,  Wyoming,  Ranking  Republican 

Wm.  S.  Broomfield,  Michigan 

Henry  J.  Hyde,  Illinois 

Jim  Courter,  New  Jersey 

Bill  McCollum,  Florida 

Michael  DeWine,  Ohio 

John  W.  Nields,  Jr. 
Chief  Counsel 

W.  Neil  Eggleston 
Deputy  Chief  Counsel 

Kevin  C.  Miller 
Staff  Director 

Thomas  R.  Smeeton 
Minority  Staff  Director 

George  W.  Van  Cleve 
Chief  Minority  Counsel 

Richard  J.  Leon 
Deputy  Chief  Minority  Counsel 


United  States  Senate 

Select  Committee  on  Secret  Military  Assistance  to 
Iran  and  the  Nicaraguan  Opposition 

Arthur  L.  Liman 
Chief  Counsel 
Mark  A.  Belnick  Paul  Barbadoro 

Executive  Assistant  Deputy  Chief  Counsel 

to  the  Chief  Counsel 

Mary  Jane  Checchi 
Executive  Director 

Lance  I.  Morgan 
Press  Officer 

Associate  Counsels 

C.  H.  Albright,  Jr. 
Daniel  Finn 
C.  H.  Holmes 
James  E.  Kaplan 
Charles  M.  Ken- 
Joel  P.  Lisker 

W.  T.  McGough,  Jr. 
Richard  D.  Parry 
John  D.  Saxon 
Terry  A.  Smiljanich 
Timothy  C.  Woodcock 

Committee  Staff 

Assistant  Counsels 

Legal  Counsel 

Policy  Analysts 

Press  Assistant 
General  Accounting 
Office  Detailees 

Security  Officer 
Security  Assistants 

Chief  Clerk 
Deputy  Chief  Clerk 

Steven  D.  Arkin* 
Isabel  K.  McGinty 
John  R.  Monsky 
Victoria  F.  Nourse 
Philip  Bobbitt 
Rand  H.  Fishbein 
Thomas  Polgar 
Lawrence  R. 

Embrey,  Sr. 
David  E.  Faulkner 
Henry  J.  Flynn 
Samuel  Hirsch 
John  J.  Cronin 
Olga  E.  Johnson 
John  C.  Martin 
Melinda  Suddes* 
Robert  Wagner 
Louis  H.  Zanardi 
Benjamin  C. 


David  Carty 
Kim  Lasater 
Scott  R.  Thompson 
Judith  M.  Keating* 
Scott  R.  Ferguson 

Staff  Assistants 

Administrative  Staff 


Computer  Center 

John  K.  Appleby 
Ruth  Balin 
Robert  E.  Esler 
Ken  Foster* 
Martin  H.  Garvey 
Rachel  D.  Kaganoff* 
Craig  L.  Keller 
Hawley  K. 

Stephen  G.  Miller 
Jennie  L.  Pickford* 
Michael  A.  Raynor 
Joseph  D. 

Kristin  K.  Trenholm 
Thomas  E.  Tremble 
Bruce  Vaughn 
Laura  J.  Ison 
Hilary  Phillips 
Winifred  A.  Williams* 
Nancy  S.   Durflinger 
Shari  D.  Jenifer 
Kathryn  A.  Momot 
Cindy  Pearson 
Debra  S.  Sheffield* 
Ramona  H.  Green 
Preston  Sweet 


Committee  Members'  Designated  Liaison 

Senator  Inouye 
Senator  Rudman 

Senator  Mitchell 

Senator  Nunn 

Senator  Sarbanes 
Senator  Heflin 

Peter  Simons 
William  V.  Cowan 
Thomas  C.  Polgar 
Richard  H. 
Eleanore  Hill 
Jeffrey  H.  Smith 
Frederick  Millhiser 
Thomas  J.  Young 

Senator  Boren 

Senator  McClure 
Senator  Hatch 

Senator  Cohen 

Senator  Trible 

Sven  Holmes 
Blythe  Thomas 
Jack  Gerard 
Dee  V.  Benson 
James  G.  Phillips 
James  Dykstra 
L.  Britt  Snider 
Richard  Cullen 

Part  Time* 

Assistant  Counsel 
Hearings  Coordinator 
Staff  Assistants 


Peter  V.  Letsou 
Joan  M.  Ansheles 
Edward  P. 

Flaherty,  Jr. 
Barbara  H.  Hummell 
David  G.  Wiencek 
Nona  Balaban 
Edward  E. 

Eldridge,  III 
Elizabeth  J.  Glennie 
Stephen  A.  Higginson 
Laura  T.  Kunian 
Julia  F.  Kogan 
Catherine  L.  Udell 

Document  Analyst 



Lyndal  L.  Shaneyfelt 
Edward  L.  Keenan 
Lewis  Liman 
Catherine  Roe 
Susan  Walsh 

♦The  staff  member  was  not  with  the  Select  Committee  when  the  Report  was  filed  but  had,  during 
the  life  of  the  Committee,  provided  services. 


United  States  House  of  Representatives 

Select  Committee  to  Investigate 
Covert  Arms  Transactions  with  Iran 

Majority  Staff 

Special  Deputy 

Chief  Counsel 
Staff  Counsels 

Press  Liaison 
Chief  Clerk 
Assistant  Clerk 
Research  Director 
Research  Assistants 

John  W.  Nields,  Jr. 
Chief  Counsel 

W.  Neil  Eggleston 
Deputy  Chief  Counsel 

Kevin  C.  Miller 
Staff  Director 

Charles  Tiefer 

Kenneth  M.  Ballen 
Patrick  J.  Carome 
V.  Thomas 

Fryman,  Jr. 
Pamela  J. 

Joseph  P.  Saba 
Robert  J.  Havel 
Ellen  P.  Rayner 
Debra  M.  Cabral 
Louis  Fisher 
Christine  C. 

Julius  M. 

Ruth  D.  Harvey 
James  E.  Rosenthal 




Executive  Assistant 
Staff  Assistants 

Catherine  L. 

Charles  G.  Ratcliff 
Stephen  M. 

Elizabeth  S.  Wright 
Bonnie  J.  Brown 
Christina  Kalbouss 
Sandra  L.  Koehler 
Jan  L.  Suter 
Katherine  E.  Urban 
Kristine  Willie 
Mary  K.  Yount 

Minority  Staff 

Associate  Minority 

Assistant  Minority' 

Minority  Research 


Thomas  R.  Smeeton 
Minority  Staff  Director 

George  W.  Van  Cleve 
Chief  Minority  Counsel 

Richard  J.  Leon 
Deputy  Chief  Minority  Counsel 

Robert  W. 
Kenneth  R.  Buck 

Bruce  E.  Fein 

Minority  Staff 

Minority  Executive 

Minority  Staff 

Michael  J.  Malbin 

Molly  W.  Tully 

Margaret  A. 

Committee  Staff 


Director  of  Security 

Robert  A. 

James  J.  Black 
Thomas  N. 

William  A.  Davis, 

Clark  B.  Hall 
Allan  E.  Hobron 
Roger  L.  Kreuzer 
Donald  Remstein 
Jack  W.  Taylor 
Timothy  E.  Traylor 
Bobby  E.  Pope 

Security  Officers 


Deputy  Editor 
Associate  Editor 
Production  Editor 
Hearing  Editors 

Printing  Clerk 

Rafael  Luna,  Jr. 
Theresa  M.  Martin 
Milagros  Martinez 
Clayton  C.  Miller 
Angel  R.  Torres 
Joseph  Foote 
Lisa  L.  Berger 
Nina  Gray  bill 
Mary  J.  Scroggins 
David  L.  White 
Stephen  G.  Regan 
G.  R.  Beckett 

Associate  Staff 










Michael  H. 

Van  Dusen 
Christopher  Kojm 
R.  Spencer  Oliver 
Bert  D.  Hammond 
Victor  Zangia 
Heather  S.  Foley 
Werner  W.  Brandt 
M.  Elaine  Mielke 
James  J. 

William  M.  Jones 

Michael  J.  O'Neil 
Richard  M.  Giza 
Richard  E.  Clark 
Warren  L.  Nelson 








General  Counsel  to 

the  Clerk 

Michael  W.  Sheehy 

Robert  H.  Brink 

Steven  K.  Berry 
David  S.  Addington 
Diane  S.  Doman 

Dennis  E.  Teti 

Tina  L.  Westby 

Nicholas  P.  Wise 

Steven  R.  Ross 



Volume  25 

Preface XXI 

Shackley,  Theodore  G 1 

Sigur,  Gaston  J  477 

Simpson,  Major  C 55 1 

Sinclair,  Thomas  C 857 

Singlaub,  John  K 909 



Volume  1 

Airline  Proprietary  Project  Officer. 
Alvarez,  Francisco  J. 
Allen,  Charles. 
Arcos,  Cresencio. 

Volume  2 

Volume  3 

Armitage,  Richard. 
Artiano,  Martin  L. 
Associate  DDO  (CIA). 
Baker,  James  A.,  III. 
Barbules,  Lt.  Gen.  Peter. 
Bamett,  Ana. 
Bartlett,  Linda  June. 
Bastian,  James  H. 
Brady,  Nicholas  F. 
Brown,  Arthur  E.,  Jr. 

Byrne,  Phyllis  M. 
Calero,  Adolfo. 
Castillo,  Tomas  ("W"). 
Cave,  George  W. 

Volume  4 

Channell,  Carl  R. 

Chapman,  John  R.  (With  Billy  Ray  Reyer). 

Chatham,  Benjamin  P. 

CIA  Air  Branch  Chief. 

CIA  Air  Branch  Deputy  Chief. 

CIA  Air  Branch  Subordinate. 

CIA  Chief. 

CIA  Conmiunicator. 

CIA  Identity  "A". 


Volume  5 

CIA  Officer. 

Clagett,  C.  Thomas,  Jr. 

Clark,  Alfred  (With  Gregory  Zink). 

Clarke,  George. 

Clarridge,  Dewey  R. 

Cline,  Ray  S. 


Cohen,  Harold  G. 

Volume  6 

Collier,  George  E. 

Cole,  Gary. 

Communications  Officer  Headquarters,  CIA. 

Conrad,  Daniel  L. 

Volume  7 

Cooper,  Charles  J. 
Coors,  Joseph. 
Corbin,  Joan. 
Corr,  Edwin  G. 
Coward,  John  C. 
Coy,  Craig  P. 
Crawford,  Iain  T.R. 

Crawford,  Susan. 
Crowe,  Adm.  William  J. 
Currier,  Kevin  W. 
DCM,  Country  15. 
DEA  Agent  1. 
DEA  Agent  2. 
DEA  Agent  3. 
deGraffenreid,  Kenneth, 
de  la  Torre,  Hugo. 
Deputy  Chief  "DC". 

Duemling,  Robert  W. 
DIA  Major. 
Dietel,  J.  Edwin. 
Dowling,  Father  Thomas. 
Dutton,  Robert  C. 
Earl,  Robert. 

Volume  8 

Volume  9 


Farber,  Jacob. 
Feldman,  Jeffrey. 
Fischer,  David  C. 
Floor,  Emanuel  A. 
Former  CIA  Officer. 
Fraser,  Donald. 
Fraser,  Edie. 
Fuller,  Craig  L. 

Volume  10 

Volume  11 

Furmark,  Roy. 

Gadd,  Richard. 

Gaffhey,  Henry. 

Gaffhey,  Henry  (With  Glenn  A. 

Galvin,  Gen.  John  R. 

Gantt,  Florence. 

Garwood,  Ellen  Clayton. 

Gast,  Lt.  Gen.  Philip  C. 

Gates,  Robert  M. 

Glanz,  Anne. 


Volume  12 

George,  Clair. 
Godard,  Ronald  D. 
Godson,  Roy  S. 
Golden,  William. 
Gomez,  Francis  D. 
Goodman,  Adam. 
Gorman,  Paul  F. 
Graham,  Daniel  O. 
Gregg,  Donald  P. 
Gregorie,  Richard  D. 
Guillen,  Adriana. 

Hakim,  Albert. 

Hall,  Wilma. 
Hasenfiis,  Eugene. 
Hirtle,  Jonathan  J. 
Hooper,  Bruce. 

Volume  13 

Volume  14 


Hunt,  Nelson  Bunker. 
Ikle,  Fred  C. 
Jensen,  D.  Lowell. 
Juchniewicz,  Edward  S. 
Kagan,  Robert  W. 
Keel,  Alton  G. 
Kellner,  Leon  B. 
Kelly,  John  H. 
Kiszynski,  George. 

Koch,  Noel  C. 
Kuykendall,  Dan  H. 
Langton,  William  G. 
Lawn,  John  C. 
Leachman,  Chris  J.,  Jr. 
Ledeen,  Michael  A. 

Leiwant,  David  O. 
Lilac,  Robert  H. 
Lincoln,  Col.  James  B. 
Littledale,  Krishna  S. 
McDonald,  John  William. 
McFarlane,  Robert  C. 
McKay,  Lt.  Col.  John  C. 
McLaughlin,  Jane  E. 

McMahon,  John  N. 
McMahon,  Stephen. 
McNeil,  Frank. 
Makowka,  Bernard. 
Marostica,  Don. 
Marsh,  John. 
Mason,  Robert  H. 

Meese,  Edwin  IIL 
Melton,  Richard  H. 
Merchant,  Brian  T. 
Meo,  Philip  H. 
Miller,  Arthur  J. 
Miller,  Henry  S. 
Miller,  Johnathan. 

Volume  15 

Volume  16 

Volume  17 

Volume  18 


Miller,  Richard  R. 

Motley,  Langhome  A. 
Mulligan,  David  R 
Nagy,  Alex  G. 
Napier,  Shirley  A. 
Newington,  Barbara. 
North,  Oliver  L. 
O'Boyle,  William  B. 
Osborne,  Duncan. 
Owen,  Robert  W. 
Pena,  Richard. 
Pickering,  Thomas. 
Poindexter,  John  M. 

Posey,  Thomas  V. 
Powell,  Gen.  Colin  L. 
Price,  Charles  H.,  II. 
Proprietary  Manager. 
Proprietary  Pilot. 
Radzimski,  James  R. 
Ramsey,  John  W. 
Ransom,  David  M. 

Volume  19 

Volume  20 

Volume  21 

Volume  22 

Raymond,  Walter,  Jr. 

Regan,  Donald  T. 

Reich,  Otto  J. 

Revell,  Oliver  B. 

Reyer,  Billy  Ray  (See  John  Chapman). 

Reynolds,  William  B. 

Volume  23 

Richard,  Mark  M. 
Richardson,  John,  Jr. 
Robelo,  Alfonso. 
Robinette,  Glenn  A. 
Rodriguez,  Felix  I. 
Roseman,  David. 


Rosenblatt,  William. 

Royer,  Larry. 

Rudd,  Glenn  A. 

Rudd,  Glenn  A.  (See  Henry  Gaffney). 

Rugg,  John  J. 
Russo,  Vincent  M. 
Sanchez,  Nestor. 
Scharf,  Lawrence. 
Schweitzer,  Robert  L. 
Sciaroni,  Bretton  G. 
Secord,  Richard  V. 

Shackley,  Theodore  G. 
Sigur,  Gaston  J. 
Simpson,  Major  C. 
Sinclair,  Thomas  C. 
Singlaub,  John  K. 

Slease,  Clyde  H.,  IIL 
Smith,  Clifton. 
Sofaer,  Abraham  D. 
Steele,  Col.  James  J. 
Taft,  William  H.,  IV. 
Tashiro,  Jack  T. 
Teicher,  Howard. 
Thompson,  Paul. 
Tillman,  Jacqueline. 

Volume  24 

Volume  25 

Volume  26 

Volume  27 

Thurman,  Gen.  Maxwell. 

Trott,  Stephen  S. 

Tull,  James  L. 

Vessey,  John. 

Walker,  William  G. 

Watson,  Samuel  J.,  IIL 

Weinberger,  Caspar. 

Weld,  William. 

Wickham,  John. 

Zink,  Gregory  (See  Alfred  Clark). 



The  House  Select  Committee  to  Investigate  Covert  Arms  Transactions  with  Iran 
and  the  Senate  Select  Committee  on  Secret  Military  Assistance  to  Iran  and  the 
Nicaraguan  Opposition,  under  authority  contained  in  the  resolutions  establishing 
them  (H.  Res.  12  and  S.  Res.  23,  respectively),  deposed  approximately  290 
individuals  over  the  course  of  their  10-month  joint  investigation. 

The  use  of  depositions  enabled  the  Select  Committees  to  take  sworn  responses 
to  specific  interrogatories,  and  thereby  to  obtain  information  under  oath  for  the 
written  record  and  develop  lines  of  inquiry  for  the  public  hearings. 

Select  Committees  Members  and  staff  counsel,  including  House  minority 
counsel,  determined  who  would  be  deposed,  then  sought  subpoenas  from  the 
Chairmen  of  the  Select  Committees,  when  appropriate,  to  compel  the  individuals 
to  appear  in  nonpublic  sessions  for  questioning  under  oath.  Many  deponents 
received  separate  subpoenas  ordering  them  to  produce  certain  written  documents. 

Members  and  staff  traveled  throughout  the  United  States  and  abroad  to  meet 
with  deponents.  All  depositions  were  stenographically  reported  or  tape-recorded 
and  later  transcribed  and  duly  authenticated.  Deponents  had  the  right  to  review 
their  statements  after  transcription  and  to  suggest  factual  and  technical  correc- 
tions to  the  Select  Committees. 

At  the  depositions,  deponents  could  assert  their  fifth  amendment  privilege 
to  avoid  self-incrimination  by  refusing  to  answer  specific  questions.  They  were 
also  entitled  to  legal  representation.  Most  Federal  Government  deponents  were 
represented  by  lawyers  from  their  agency;  the  majority  of  private  individuals 
retained  their  own  counsel. 

The  Select  Committees,  after  obtaining  the  requisite  court  orders,  granted 
limited  or  "use"  immunity  to  about  20  deponents.  Such  immunity  means  that, 
while  a  deposed  individual  could  no  longer  invoke  the  fifth  amendment  to  avoid 
answering  a  question,  his  or  her  compelled  responses— or  leads  or  collateral 
evidence  based  on  those  responses— could  not  be  used  in  any  subsequent  criminal 
prosecution  of  that  individual,  except  a  prosecution  for  perjury,  giving  a  false 
statement,  or  otherwise  failing  to  comply  with  the  court  order. 

An  executive  branch  Declassification  Committee,  located  in  the  White  House, 
assisted  the  Committee  by  reviewing  each  page  of  deposition  transcript  and  some 
exhibits  and  identifying  classified  matter  relating  to  national  security.  Some 
depositions  were  not  reviewed  or  could  not  be  declassified  for  security  reasons. 

In  addition,  members  of  the  House  Select  Committee  staff  corrected  obvious 
typographical  errors  by  hand  and  deleted  personal  and  proprietary  information 
not  considered  germane  to  the  investigation. 

In  these  Depositions  volumes,  some  of  the  deposition  transcripts  are  follow- 
ed by  exhibits.  The  exhibits— documentary  evidence— were  developed  by  Select 
Committees'  staff  in  the  course  of  the  Select  Committees'  investigation  or  were 
provided  by  the  deponent  in  response  to  a  subpoena.  In  some  cases,  where  the 
number  of  exhibits  was  very  large,  the  House  Select  Committee  staff  chose  for 
inclusion  in  the  Depositions  volumes  selected  documents.  All  of  the  original 


exhibits  are  stored  with  the  rest  of  the  Select  Committees'  documents  with  the 
National  Archives  and  Records  Administration  and  are  available  for  public  in- 
spection subject  to  the  respective  rules  of  the  House  and  Senate. 

The  27  volumes  of  the  Depositions  appendix,  totalling  more  than  30,000  pages, 
consist  of  photocopies  of  declassified,  hand-corrected  typewritten  transcripts 
and  declassified  exhibits.  Deponents  appear  in  alphabetical  order. 



Publications  of  the  Senate  and  House 
Select  Committees 

Report  of  the  Congressional  Committees  Investigating  the  Iran-Contra  Affair, 
1  volume,  1987. 

Appendix  A:  Source  Documents,  2  volumes,  1988. 
Appendix  B:  Depositions,  27  volumes,  1988. 
Appendix  C:  Chronology  of  Events,  1  volume,  1988. 
Appendix  D:  Testimonial  Chronology,  3  volumes,  1988. 

All  publications  of  the  Select  Committees  are  available  from  the  U.S. 
Government  Printing  Office. 



UNITED  STATES  SENATE      J\^)l^^^^^^^l^1 





Partially  DeclassifieO/Rei.ased  on  2^*^  88 
onocr  provisions  of  E  0   !23si 
"  Jonnsorugaticnal  Saciiriiy  Council 


Washington,  D.C. 
Tuesday,  September  15,  1987 




Steiwtype  Reporters 

444  North  Capitoi  Street 

Washington,  D.C.  20001 

(202)  347-3700 
Nationwide  Coverage 


82-736  0-88-2 







Washington,  D.C. 


September  15,  1987 

Deposition  of  THEODORE  G.  SHACKLEY,  called  for 

examination  at  the  offices  of  the  Senate  Select  Committee, 

Suite  901,  the  Hart  Senate  Office  Building,  at  10:10  a.m. 

before  DAVID  L.  HOFFMAN,  a  Notary  Public  within  and  for  the 

District  of  Columbia,  when  were  present  on  behalf  of  the 

respective  parties: 

Associate  Counsel 
United  States  Senate 

Select  Committee  on  Secret 

Military  Assistance  to  Iran 

and  the  Nicaraguan  Opposition 

Partially  Declassified/Released  on    "?'sJ-/^< 
unoer  provisions  of  E.O   12356 
by  K  Johnson.  National  Secuniy  Council 




JOSEPH  P.  SABA  ,  Esq. 
Associate  Majority  Counsel 
Associate  Minority  Counsel 

United  States  House  of 

Representatives  Select 

Ccnmittee  to  Investigate 

Covert  Arms  Transactions  with  Iran 

JACK  MC  KAY,  Esq. 

Shaw,  Pittman,  Potts  &  Trowbridge 
2300  N  Street,  N.W. , 
Washington,  D.C. 

On  behalf  of  the  Deponent 








G.  Shackley 

by  Mr. 


4,  171 

by  Mr. 



by  Mr. 







1  through  5 






f>  '  v- 





(Shackley  Deposition 
Exhibits  1-5  identified.) 

was  called  as  a  witness  and,  having  been  first  duly  sworn 
was  examined  and  testified  as  follows: 
Q     Would  you  please  state  your  name  for  the  record. 
A     Theodore  Shackley. 

Q     I  understand  you  have  a  statement  you  would  like 
to  make . 

A     I  would  like  to  make  a  couple  of  points,  as  we 
start  today's  session. 

The  first  point  that  I  would  like  to  make  is 
that  I  have  furnished  no  advice,  funds  or  equipment  to  the 
contras,  and  I  have  not  sold  them  anything,  and  I  am 
convinced  the  committee  knows  that  to  be  a  fact,  based  on 
your  questioning  of  other  witnesses. 

Secondly,  on  the  topic  of  Iran,  I  have  not  been 
involved  with  the  National  Security  Council  or  any  other 




agency  of  the  U.S.  Government,  in  order  to  arrange  direct 
or  indirect  sales,  -shipment  or  provision  of  arms  to  Iran. 

In  my  view,  the  committee  also  knows  that  to  be 
fact,  based  on  the  investigations  conducted  to  date. 

Thirdly,  as  you  have  undoubtedly  read  from  my 
statements  in  the  "Washington  Post"  and  other  places,  I 
did  have  a  meeting  in  November  1984  in  Hamburg,  Germany, 
with  a  Mr.  Ghorbanifar.   That  meeting  was  attended  by  two 
other  individuals.   Emerging  from  that  was  a  reference 
by  Mr.  Ghorbanifar,  who  was not  known  as  an  arms  dealer 
at  that  time,  but  he  had  information  on  Americans  in 
Lebanon.   I  took  that  information  pertaining  to  the 
Americans  in  Lebanon,  wrote  a  report,  turned  it  into  the 
State  Department,  to  Ambassador  Vernon  Walters.   I  turned 
it  into  the  State  Depeurtment,  because  that  is  the  agency 
of  the  U.S.  Government  that  is  responsible  for  Americans 
abroad  who  are  in  trouble.   I  subsequently  heard  from 
the  Department  through  Mr.  Montgomery,  the  Chief  of  the 
State  INR,  that  they  weren't  interested  in  the  data  that 
I  had  furnished.   That  was  in  December  1984.   I  took  no 
further  action. 

In  May  of  1985,  I  was  asked  by  Mr.  Ledeen, 

e-fCKML  DCraiTEII].   INC 



who  then  was  a  consultant  to  the  National  Security  Council, 
if  I  had  any  ideas  on  what  could  be  done  for  the  hostages  in 
Lebanon.   I  told  him  I  had  none. 

I  did  tell  him  that  I  had  previously  written  a 
paper  which  I  turned  in  to  the  State  Department.   He  asked 
me  if  he  could  see  a  copy  of  that  paper,  I  would  give  him  an 
update  on  whether  that  channel  was  still  viable. 

I  did  both  of  those  things.   I  turned  them  over 
to  Mr.  Ledeen,  and  I  never  heard  anything  further  on  that 
matter,  until  such  time  as  the  press  started  questioning  me 
about  my  contacts  with  Mr.  Ghorbanifar. 

Based  on  this  sequence  of  events,  my  testimony 
to  the  Tower  Commission  and  my  discussions  with  Mr.  Holmes 
and  Mr.  Polgar  in  February  and  March  of  1987,  I  am  perplexed 
as  to  why  you  have  burdened  me  at  this  late  date  with  a 
series  of  subpoenas   so  onerous  in  scope,  they  required  me 
to  spend  over  215  hours  of  file  searches  and  to  make  an 
appearance  at  today's  session. 

Put  most  simply,  the  questions,  from  my  point  of 
view,  are:   Why  are  you  doing  this?  And  what  do  you  want? 

These  are  not  rhetorical  questions  born  out  of 
frustration  and  anger.   The  issue  is  one  of  fairness. 



.(-fCKIAl.  •CraHTEIIS.  INC 

In  short,  why  is  my  hisiness  being  put  in 
jeopardy,  and  why  am  I  being  harassed  for  having,  in  my  view, 
quite  properly,  reported  to  the  State  Department,  information 
obtained  by  chance  on  American  hostages  in  Lebanon.   And  I'm 
concerned,  because,  as  you  know,  I'm  also  involved  in  a 
lawsuit  in  Florida  which  has  been  brought  against  me  for 
what  I  think  are  vicious  political  reasons,  and  I'm  trying 
to  understand  what  this  assault  is  on  me,  for  what  reason. 

And  Mr.  Holmes,  I  would  be  specifically  interested  - 
in  hearing  your  response  to  those  questions,  so  I  understand 
why  you  called  me  down  here.  ' 
Thank  you. 

Q     Mr.  Shackley,  unfortxinately ,  you  have  asked  a 
question  that  is  not  appropriate  for  this  forum  for  me  to 
respond  to. 

I  can  tell  you  that  the  committee  has  legitimate 
interests  in  the  facts  that  you  have  in  your  mind  and  in  your 
files,  and  we  intend  to  get  those  facts  in  a  way  that  will 
protect  you  within  the  rules  of  the  coi^ttee  from  unauthorized 
or  inappropriate  disclosure  of  that  information  in  doing  so. 

A     What  does  that  mean?  What  are  you  saying,  that  you 
are  not  going  to  answer  my  question? 



Q     This  is  your  deposition,  Mr.  Shackley;  it's  not 
my  deposition.   You're  here  to  answer  questions. 

A     Why  did  you  ask  me  to  come  down? 

Q     The  committee  has  information  that  you  do  have 
firsthand  knowledge   of  a  number  of  areas  and  events  that 
do  directly  relate   to  this  investigation.   It  is  simply  a 
misconception,  if  I  understand  your  statement  correctly,  that 
a  person  who  has  not  sold  arms  to  Iran  or  supplied  arms  to  the 
contras  doesn't  have  relevant  information.   As  you  may  know 
from  following  the  hearings,  most  of  the  witnesses  would  fall  ■ 
into  neither  of  those  categories.   You  are  another  witness. 
Whether  you  fall  into  either  of  those  categories  or  not, 
simply  doesn't  mean  that  you  don't  have  important  information 
for  us. 

Your  concerns  about  the  Florida  lawsuit  are 
recognized,  as  our  any  witnesses'  concerns  about  unauthorized 
disclosure  of  information.   I've  discussed  those  things  with 
your  attorney.   I  notice  that  you'd  stcunped  everything  that 
you've  given  us  "Committee  Sensitive,"   I  presume,  pursuant 
to  those  discussions.   I  can  assure  you  that  the  rules  of  our 
committee,  which  we  abide  by  religiously .protect  you  from 
unauthorized  disclosures. 






If  you  have  additional  concerns,  for  exeunple,  in 
the  area  of  the  Fifth  Amendment,  I  might  mention  at  this  point 
that  it's  not  the  intention  of  this  committee  to  replace  your 
Fifth  Amendment  privilege  with  any  order  of  immunity  for 
your  testimony.   I  assume  that  your  attorney  will  be  vigilant 
in  reminding  you  of  those  rights,  if  any  such  situation  would 
come  up,  but  you  do  not  have  a  Fifth  Amendment  privilege  to 
fail  to  disclose  information,  simply  because  it  may  lead  to 
your  financial  liability  in  a  lawsuit,  which  I  express  no 
opinion  on  one  way  or  the  other.   You  bring  me  the  concern 
of  a  lawsuit,  and  that's  my  response. 

MR.  MC  KAY:   We  haven't  raised  any  Fifth  Amendment 
privilege  questions. 

MR.  HOLMES:   I  understand.   I  am  just  seeking  to 
catalog  all  the  reasons  why  he  might  not  want  to  answer 
questions.   That  doesn't  appear  to  be  one  of  them.   You  have 
never  asserted  the  Fifth  Amendment  befcre. 

THE  WITNESS:   No,  I  have  not. 

Q     So  what  we  are  here  to  do  today  is  to  do  what  we 
had  intended  to  do  early  in  September,  and  that  is  to  determine 
the  completeness  of  the  response  to  the  various  subpoenas  that 





have  been  served  on  you  in  your  personal  capacity  and  also  as 
representative  of  various  corporations. 

After  we  have  done  that  and,  obviously,  since  you 
have  produced  two  boxes  of  records  last  yesterday  afternoon, 
not  leaving  any  time  to  examine  them  prior  to  your  deposition 
this  morning,  catalog  them  and  examine  them  and  then  determine 
whether  or  not  we  need  to  continue  the  deposition  either  this 
week-  or  to  postpone  it  until  perhaps  early  next  week,  in  order 
to  question  you  on  the  documents  themselves,  if  that  is 

I  would  like  to  know  from  you  and  your  attorney 
what  your  schedules  are  in  that  regard,  so  we  can  aim  at  one 
or  the  other  alternatives. 

A     Well,  toward  the  latter  part  of  this  week,  I  have 
some  appointments  that  I  have  to  keep,  so  I'm  basically  not 
available  on  Friday  of  this  week. 

MR.  MC  KAY:  I'm  in  depositions  in  New  York  and 
Mobile,  Wednesday,  Thursday  and  Friday.  I'm  here  all  next 

MR.  HOLMES:   So  next  Monday  would  be  the  best  day 
to  resume. 

MR.  MC  KAY:   That's  the  best  day  for  me,  yes. 


E-rCHIIkL  «EK)«Tt«S,   INC 




MR.  HOLMES:   Let's  aim  at  that. 

Q     I'd  like  to  have  you  glance  at  these  Exhibits  1 
through  4 . 

(Documents  handed  to  witness.) 

MR.  HOLMES:   They  are  subpoenas.   For  the  record, 
I  will  read  off  what  the  subpoena  is,  so  we  can  associate  a 
number  with  a  name. 

Exhibit  No.  1  is  to  Theodore  Shackley. 

Exhibit  No.  2  is  to  API  Distributors. 

Exhibit  No.  3  is  to  System  Services  International. 

And  Exhibit  No.  4  is  to  TGS  International,  Ltd. 
Although  I  note  it's  got  a  typo. 

I  assume  that  by  producing  TGS  International 
dociiinents,  you  were,  in  good  faith,  attempting  to  ignore  that 

(Document  handed  to  witness.) 

THE  WITNESS:   There  were  five. 

MR.  MC  KAY:   There  were  five  subpoenas.   RAI, 
you  don't  have,  which  we  did  respond  to. 

THE  WITNESS:   The  gentlemem  who  came  around  and 
gave  me  subpoenas,  gave  me  five. 






Q     It  is  substantially  identical  to  the  others, 
except  that  it  says  RAI ;  correct? 


I  think  in  some  of  the  paragraphs ,  they  were 
worded  differently,  but  the  substance  of  the  materials,  from 
looking  at  all  these  and  trying  to  respond  to  it,  they 
basically  cover  the  same  data. 

Q     The  only  difference  is,  the  personal  subpoena  is 
different  than  the  corporate  subpoenas;  correct? 

MR.  MC  KAY:   There  is  one  difference,  and  I  can't 
tell  you  which  one.   One  of  the  subpoenas  has  different 
Paragraph  2.   It's  inconsequential,   but  one  of  them  does  not 
have  the  paragraph  2  that  says  "With  regard  to  any  activity 
undertaken  personally  or  a  consultant  on  materials  required 
in  No .  1  above . " 

That's  missing. 

MR.  HOLMES:   Did  that  cause  any  difference  in  your 

MR.  MC  KAY:   No. 

THE  WITNESS:   If  you  take  these  five  documents 
that  were  delivered,  we  have  made  a  good  faith  search  of 
my  files  relative  to  the  totality  of  the  information  that 






seems  to  be  conveyed,  although  the  paragraphs  are  different, 
ij  as  Mr^  McKay  has  pointed  out  in  one  or  two  of  these. 
Q     Okay.   With  regard  to  each  corporation,  I  would 
like  to  ask  you  what  your  official  capacity  is  in  that 
corporation  and  what  has  led  to  your  designation  by  the 
corporation  as  the  corporate  representative  for  production 
of  documents . 

Start  with  API. 

MR.  MC  KAY:   Let  me  just  state  for  the  record 
which  corporations  he  is  designated  for. 

Those  afe   TGS  International  and  RAI. 
We  are  not  making  any  designation  with  respect  to 
API  or  with  respect  to  System  Services  International. 
Q     All  right.   Let's  just  start  with  API  then.  Since 
you  are  not  the  designee  for  API ,   could  you  explain  to  me 
what  your  role  in  API  is? 

A     I  don't  have  any  role  in  API.   You  selected  these. 
You  sent  them  to  me.   I  don't  know  why  you  sent  then  to  me. 
Q     That's  what  I'm  trying  to  discover. 
What  do  you  know  of  API? 



-       I 



A     When  I  retired  in  August  of  1979,  I  worked  for 
API  Distributors. 

Q     Who  were  the  officers  of  the  company  at  that  time? 

A     As  far  as  I  know,  Mr.  Thomas  Clines  —  I  don't 
really  remember.   I  haven't  done  any  work  with  them  since, 
basically,  1980. 

Q     When  did  you  retire,  what  date? 

A     I  don't  remember  the  exact  date  that  I  retired. 
It  was  the  last  day  --  I  think  it  was  August  1979. 

Q     And  you  went  immediately  to  work  for  API? 

A     I  went  to  work  primarily  for  API.   That  was  the 
main  area. 

Q     Mr.  Clines  was? 

A     The  president  and  owner  of  that  particular 
company . 

Q     You  had  no  equity? 

A     I  was  not  a  stockholder  in  that  company,  and  I 
was  not  an  officer  in  that  company. 

Q     You  were  a  consultant? 

A     Well,  I  worked  as  sort  of  a  consultant,  employee, 

office  manager,  trying  to  get  the  company  off  the  ground. 

Q     Did  you  ever  have  any  interest /API  to  be  described  ^s 






an  interest  in  the  equity  of  the  company? 

A     No. 

Q     For  example,  did  you  ever  loan  them  money? 
Did  you  ever  loan  them  money? 

A     No,  I  never  lent  it  money,  and  they  never  lent  me 
money . 

Q     You  never  served  on  the  board? 

A     No,  I  did  not. 

Q     You  were  never  an  officer? 

A     I  was  not. 

Q     As  to  SSI,  what  is  your  relationship  with  SSI? 

A     SSI  was  another  one  of  the  companies  that  was 
owned  by  Mr.  Clines.   It  was,  basically,  an  inactive 
company . 

Q     You  say  it  was  inactive? 

Q     Basically,  inactive.   In  other  words,  it  was 
designed,  originally,  to  be  a  trading  company,  securities 
systems.   But  my  recollection  of  that  period  of  time,  I 
don't  really  remember  anything  of  significance  happening 
in  that  particular  company. 

Q     You  never  received  any  money  from  it? 

A     No.   I  don't  recall  receiving  any  money.   Maybe 

E-rcoatM.  urarrEiis.  inc 





some  expense  funds  for  things  that  I  did  on  their  specific 
behalf,  but  I  didn't  see,  as  far  as  I  can  recall,  no  salary, 
no  consultant  fees. 

Q     You  did  do  things  on  its  behalf  then? 
A     I  think,  yes.   I  had  discussions  with  people  to 
try  to  start  various  kinds  of  business  activity,  but  it 
didn't  go  anywhere. 

Q     With  whom  did  you  have  discussions  on  its  behalf? 
A     I  don't  recall.   For  instance,  there  were  things 
like  we  were  trying  to  export  rope  to  various  countries.   I 
think  we  tried  to  find  sporting  equipment  manufactured 
overseas,  and  so  forth,  to  be  put  into  the  U.S.  market,  but 
I  don't  have  any  real  vivid  recollection  at  this  point  in 
time.   I  mean,  that  stopped.   I  haven't  been  doing  anything 
with  that  since  1980.   This  is  1987.   I  don't  have  any  real 
Q     So  that  would  have  been  between  August  of  '79  and 
sometime  in  1980? 

A     No.   I  retired  in  August.   I  started  in 
September.   So  September  of  1979  to  probably  somewhere  in 
about  June  or  July  of  1980.   There  may  have  been  some 
administrative  items  that  I  was  concerned  with  later,  maybe 
particularly  with  API  trying  to  collect  funds,  and  so  forth, 


;.ftDC«»l.  «£K)«T£«S.   INC 




for  the  company,  but  I  don't  recall  any  actions  with  SSI 
after,  certainly,  July  of  1980. 

Q     Who  were  the  other  officers,  if  any,  of  SSI? 

A     I  don't  recall  anybody  except  Mr.  Clines.   It 
was  basically  his  company,  and  I  don't  have  a  list  of  the 

Q     Let ' s  move  on  to  RAI . 

What's  your  association  with  RAI? 

A     It's  a  company  that  I  started. 

Q     When  did  you  start  it? 

A     It's  in  the  corporate  records.   You've  asked  for 
corporate  documents.   The  corporate  documents  are  in  there. 
It's  probably  sometime  in  1980. 

Q     Who  are  the  officers  in  RAI? 

A     The  officers  are  myself,  Mr.  Donald  Jameson  and 
my  wife.  Hazel  Shackley. 

Q     And  the  directors? 

A     The  directors  are  myself,  Donald  Jameson  and  a 
Mr.  Ledbetter. 

Q     Was  there  some  corporate  action  that  led  to  your 
designation  to  respond  to  the  RAI  subpoena,  or  did  you  just 
do  that  in  your  capacity  as  president? 

EfED£R»l.  «tK)«TE»5,   INC 




A     One  of  the  subpoenas  you  gave  me  was  for  RAI. 

Q     Correct. 

A     I'm  not  sure  I  understand. 

Q  When  a  corporation  gets  a  subpoena,  the  corporation 
decides  who  to  designate.  RAI,  apparently,  since  you're  here 
for  RAI,  decided  to  designate  you. 

A     Yes. 

Q     Who  made  that  decision? 

A     I  did. 

Q     That's  all  I  wanted. 

A     I  didn't  understand  the  question. 

Q     You  didn't  consult  with  any  other  people? 

A     No. 

AA    Not  really,  no,  because  I  got  a  barrel  of  these, 
and  I  just  went  to  try  to  respond  to  them,  to  the  best  of 
my  ability. 

Q     What  is  the  business  of  RAI? 

A     RAI  is  essentially  a  risk  analysis  ccanpany. 

Q     Does  it  have  certain  specialties? 

A     We  work  primarily  in  the  oil  sector,  not 
exclusively,  but  primarily. 

Q     Does  it  work  in  any  particular  part  of  the  world? 





A     It  covers  the  oil  producing  countries  of  the  world. 

Q     Does  that  mean  that  it  specializes  in  the  Middle 
East?   Does  it  also  do  work,  say,  in  the  North  Sea? 

A     Well,  we  monitor  developments  in  the  North  Sea. 
For  instance,  we  monitor  what  trends  are,  what  production  is, 
in  that  area,  what  fields  are  going  to  be  worked  over,  and 
therefore,  are  being  taken  out  of  production,  that  has  an 
effect  on  the  market. 

Q     Do  you  have  a  regular  clientele,  or  do  you  place 
your  product  on  the  market  in  some  other  fashion? 

A     I  have  primarily  one  client. 

Q     What  business  is  this  client  in? 

A     Oil. 

Q     I  assume  you're  talking  about  spot  purchase  and 

A     It's  a  company  that  engages  in  oil  trading,  but 
it  also  has  refinery  interests. 

Q     Where's  their  refinery? 

A     Their  refinery's  in  the  United  States. 

Q     And  this  client  purchases  oil  on  the  world  market 
from  various  sources,  I  assume? 

A     Yes.   I'm  trying  to  explain  to  you,  the  client  is, 






first  and  foremost,  an  oil  trader.   That  is,  buying  and 
selling  oil,  not  necessarily  related  to  the  spot  market. 
In  some  arrangements,  oil  is  purchased  on  the  basis  of 
contracts  or  marketing  agreements  that  the  client  may  have 
with  producing  states. 

That's  one  part  of  this  business. 
The  other  part  of  this  business  is,  he  also  has 
a  refinery.   Now  the  refinery  may  not  be  able  to  use  the 
crude  that  he's  trading  in.   Therefore,  he's  got  to  buy 
other  crude  for  the  refinery.   And  so,  you  know,  it's  a 
multidimensional  problem. 

Q     I  understand.   Is  this  the  client  that  is  based 
in  the  Bahamas? 

A     The  Bahamas? 

Q     Yes. 

A     No. 

Q     Who  is  this  client? 

A     The  client  is  Trans-World  Oil. 

Q     Is  that  sometimes  known  as  TW  Oil? 

A     Yes.   There  are  various  corporate  entities. 
I  don't  know  how  many  corporate  entities  they  have,  but  my 
main  contract  is  with  Trans-World  Oil  New  York. 





Q     Is  that  sometimes  —  is  there  an  affiliated 
company,  that  is  known  as  Third  World  Oil  also,  TWI? 

A     I  do  not  know  of  a  company  called  Third  World  Oil. 
There  is  a  company  that  they  have  thafs  called  TW  Oil. 

Q     There's  at  least   two  entities  that  you  are  aware 
of.   One  is  Trans  World  and  the  other  is  TWI? 

A     Right.   TW  Oil. 

Q     They're  not  different  words  for  the  same 
corporation  ? 

A     No,  they're  different  corporations.   The  principal 
has  a  large  holding  company,  and  there's  a  chart  I've  seen, 
you  know,  of  these  various  companies.   For  instance,  I  don't 
know  if  it's  TW  Oil  or  Trans-World  Oil  London,  for  example. 
There's  a  Trans-World  Oil  Paris.   They  have  an  office  in 
Tokyo.   They  have  an  office  in  Singapore.   But  I  don't  know  — 
I  mean,  to  me,  it's  TW  Oil.   I  haven't  paid  that  much 
attention  to  whether  it's  incorporated  in  Japan  as  Trans-World 
Oil  or  TW  Oil. 

I  know  of  no  cattpany  that  I'm  associated  with  by  the 
name  of  Third  World  Oil.   I  think  that  was  one  of  the  questions 
that  you  put  to  me. 

Right.      Okay. 






Is  RAI  engaged  in  any  other  business  besides  what 
you  call  risk  analysis? 

A     Well,  as  an  adjunct  to  risk  analysis,  we  do 
security  work.   We  design  security  systems.   We  provide 
training  for  corporate  security  organizations. 

Q     Is  that  also  in  the  oil  business? 

A     Ye,,   primarily.   I  don't  recall  having  done  a 
project  for  anybody  who's  not  oil-related. 

Q     Are  there  additional  lines  of  work  that  RAI  does? 

A     The  other  thing  that  we're  involved  in  is  VIP 

Q     How  does  that  business  operate? 

A     It's  a  problem  of  making  an  assessment  of  what  kind 
of  threat  there  is  to  a  corporate  executive  or  his  family  or. 
his  property,  then  providing  a  security  envelope  that's 
response  to  that  potential  threat.   That  could  include  putting 
in  a  security  system  at  an  estate,  having  VIP  bodyguard 
type  individuals  travel  with  the  executive  as  they  move  about. 

Q     E)o  you  actually  provide  the  people  to  do  that? 

A     Yes,  I  do.   Not  in  all  cases,  but  — 

Q     I  assume  that  in  providing  that  kind  of  individual, 
you  have  —  what  do  you  call  it  —  a  network,  a  group  of 

ircoMiu.  xraaTEiis.  inc 






people  you  would  call  on  for  that  kind  of  service? 

A     Depending  on  what  it  is.   For  instance,  if  it's  an 
individual  who  is  going  to  manage  one  of  these  programs  when 
it's  established,  I  may  go  out  and  look  in  the  market  and 
do  a  talent  search,  till  I  find  somebody  who  I  believe  is 
responsive  and  capable  of  doing  that  particular  job. 

Q     And  you  would  keep  records  that  would  reflect  past 
talent  searches,  in  order  to  help  you  with  possible  future 
talent  searches? 

A     I  have  seme  resumes,  yes.   I  keep  some  resumes  on 

Q     Are  there  other  businesses  of  RAI ,  other  lines  of 
work  that  you  do? 

A     No.   It's  all  —  you  know.   I  should  have  brought 
you  a  copy  of  my  article  on  risk  analysis,  because  I  do  what  is 
a  full  service  company  in  risk  analysis.   Some  people  may  say  — 
and  I  have  a  situation  where  a  client  says,  "I'm  interested 
in  acquiring  some  property.   Please  go  out  and  take  a  look  at 
that  property." 

That  may  be  property  that  the  client  wants  to 
acquire  for  personal  reasons.   It  may  be  property  that  they 
want  to  acquire  for  corporate  reasons,  but  I've  gone  out  and 





found  property,  but  that's  all  under  the  rubric  of  risk 
analysis.   I  don't  want  you  coming  back  to  me  later  and  saying 
that  I  wasn't  giving  you  a  fulsome  answer,  but  I  am  trying 
to  show  you  what  risk  analysis  is.   It's  trying  to  provide 
people  with  information  relative  to  their  busienss. 

Q  Actually,  what  I  was  thinking  of  in  the  back  of 
my  min^  was,  I  thought  that  you  had  told  me  in  a  previous 
interview,  you  also  sold  oil  drilling  equipment  through  RAI . 

A     Not  under  RAI.   I  think  you've  got  that  confused. 

Q     I'm  sorry.   That  was  another  corporation? 

A     Yes.   API  was  in  the  oil  field  equipment  business 
and  was  attempting  to  sell  primarily  valves  and  flanges  used 
in  the  oil  industry.   The  primary  market  at  that  time  was 
Mexico  and  the  state  enterprise  known  as  Pemex. 

Q     What  period  of  time  was  this  oil  equipment  business 
being  conducted  by  API? 

A     My  involvement  was  when  I  started  in  September 
of  1979  until,  basically,  I  stopped  in  July  of  1980,  although 
I  think  after  July  of  1980,  there  may  have  been  still  some 
bills  that  we  were  pursuing  to  get  collected.   I  remember 
a  long  hassle  with  the  Pemex  office  in  Paris.   It  took  a 
long  time  to  get  paid.   That's  one  of  the  reasons  why  that  was 

E-rcKui.  nePOTTciis  inc 





a  successful  business. 

I'll  go  back  to  API,  so  that  you  can  understand 
this.   The  valve  and  flange  business,  there  was  a  large 
market  in  Mexico,   when  the  Mexican  oil  industry  was 
expanding,  all  right?   But  the  way  the  Mexican  oil  industry 
was  run^  what  we  did  on  these  valve  and  flange  orders,  a 
small  company  like  API  would  generally  only  be  in  a  situation 
to  obtain  contracts  under  $1  million. 

The  other  thing  was,  Pemex  was  using  a  computer 
system  to  take  off  of  everybody's  bid  list  what  might  be 
considered  your  loss  leader,  all  right?   So  your  smallest 
profit  item  on  your  list  would  be  picked  up  by  Pemex.   If 
I  had  found  a  producer,  let's  say,  in  Italy  or  somewhere,  who 
could  make  it  for  a  dollar  cheaper,  that  was  one  problem. 
Two,  you  couldn't  get  the  vol'jme.   Three,  Pemex  was  notoriously 
slow  in  paying.   In  other  words,  they  never  paid  on  delivery. 
And  the  fourth  dilemma  was  that  at  that  time,  the  dollar-peso 
ratio  was  declining.   So,  in  other  words,  you  were  losing 
money  the  longer  your  money  was  out,  because  the  peso  was 
being  devalued.   So  when  you  took  this  conglomerate  of  these 
things,  despite  the  fact  that  you  could  sell,  you  couldn't 
make  any  money,  and  it  took  me  that  long  to  figure  that  out. 

:E'rEDCiiAi.  DEPOiirEiis.  inc 





Now,  you  know,  you  might  have  found  it  out  quicker, 
but  that's  how  long  it  took  me  to  figure  it  out  from 
September  1979  to,  roughly,  July,  but  there  were  some  loose 
ends  that  had  to  be  cleaned  up  after  that,  and  I  think  I  did 
clean  those  up  after  that,  although  I  was  not  involved. 

Q     What  other  people  were  involved  in  the  Pemex  oil 
business  that  you're  aware  of? 

MR.  MC  KAY:   You  mean  with  him,  with  respect  to 
API  or  just  in  general  in  the  world? 

MR.  HOLMES:   Let's  start  with  API  and  go  from 
there . 

THE  WITNESS:   Other  people  that  were  involved. 
There's  a  gentleman  by  the  name  of  Richard  Finney. 
Q     Anybody  else? 

A     Yes.   Ricardo  Chavez.   He  was  in  Mexico. 
Q     Were  they  operating  for  API  in  their  Pemex 

A     Yes.   And  the  other  individual   involved  was 

Q     Rafael  Quintero? 
A     Right . 

:t-rtK«M.  ncraiTtiis.  inc 





Q     How  were  they  capitalized? 

MR.  MC  KAY:   I'm  sorry.   How  was  who  capitalized? 

Q     How  were  these  people  capitalized  in  their  dealings 
with  Pemex  for  API? 

A     You're  going  to  have  to  state  that  question  some 
other  way,  because  I'm  not  sure  what  you're  asking. 

Q     Do  you  know  anything  about  where  they  got  their 
money  to  do  any  of  these  deals? 

A     API  had  some  funds.   Mr.  Clines  had  put  funds  into 
the  company.   When  you  issued  what  was,  in  effect,  a  bid 
in  response  to  a  request  for  a  proposal,  Pemex  periodically 
would  put  out  requests  for  equipment,  a  bid.   Once  you  got 
on  the  Pemex  list,  you  automatically  got  a  receipt  of  whatever 
they  were  looking  for  at  a  particular  point  in  time.   So, 
let's  say,  once  every  month,  once  every  six  weeks,  once 
every  eight  weeks,  depending  on  what  their  needs  were  and 
what  their  forecast  needs  were,  Pemex  would  issue  a  request 
for  proposal.   You  would  then  see  what  they  were  looking  for, 
and  you  had  a  deadline  within  which  to  bid. 

So  then  you  would  go  out  to  your  suppliers  and  get 
bids  from  them,  and  they  put  the  package  together,  and  if  you 





actually  had  to  buy,  then  you  had  to  provide  the  funds,  and 
you  got  the  award. 

Q     And  the  f  winds  that  Messrs.  Finney ,  Chavez  and 
Quinterc'  would  rely  on  in  making  those  bids  were  API  funds? 

A     Were  API  funds. 

Q     Was  there  any  subsidiary  or  budget  unit  of  API 
that  was  designated  as  the  profit  center  for  this  particular 

A     No. 

Q     It  was  an  activity  of  API? 

A     This  was  API;  yes. 

Q  Are  you  aware  of  any  loans  that  were  ever  made 
to  Finney,  Chavez  or  Quintero  in  relation  to  the  Mexican 
oil  industry? 

A     I'm  not  aware  of  any  loans  that  were  made  to 
Mr.  Finney,  and  I'm  not  aware  of  any  for  Chavez  and 
Quintero,  but  I  would  have  have  less  knowledge  of  that. 

Q     Did  you  ever  arrange  connections  or  contacts 
for  Quintero,  whereby  he  was  supposed  to  get  a  loan  for 
his  activities? 

A     I  have  no  memory  of  anything  like  that. 

Q     Have  we  gotten  to  the  bottom  of  the  well  on 



-    !l 



RAI's  business  activities. 

A     As  far  as  I  know. 

MR.  HOLMES:   Now  you  produced  a  handsome  box  of 
records  to  us  in  response  to  the  RAI  subpoena. 

I  am  going  to  ask  the  court  reporter  to  make  this 
entire  box  Exhibit  No.  6. 

(Shackley  Deposition  Exhibit  6 
Q     Mr.  Shackley,  I'm  showing  you  what's  marked  now 
as  Exhibit  No.  6,  the  box.   Let  me  ask  you,  just  in  general, 
if  you  have  subdivided  these  folders  which  you  have  provided 
into  subdivisions,  in  accordance  with  the  subpoena. 

Is  that  the  significance  of  this  one  here  that 
says  '! Appendix  1,  Paragraph  3"? 

A     That's  a  division,  to  the  best  of  our  knowledge, 
in  response  to  this,  because  in  some  of  these  areas,  they 
overlap.   That's  the  way  we  felt  we  were  responding. 

Q     So  would  it  be  fair  for  me  to  infer  from  that 
that  you  personally  have  gone  through  the  records  of  RAI 
and  that  what  is  in  Exhibit  No.  6,  the  box,  is  everything 
that,  in  your  opinion,  responded  to  each  of  these  sections 



-    !l 


of  the  subpoena? 

A     No.   That's  not  correct. 

Q     Let's  hone  that  down,  because  I  understand  from 
the  letter,  which  is  Exhibit  No.  5,  that  there  are  some 
rough  edges,  and  that's  what  I  want  to  get  at  now. 

A     First  of  all,  I  had  a  search  made  of  RAI  files 
by  one  of  my  employees  in  response  to  that  list. 

Q     Who  was  that  en^loyee? 
Mrs.  Keating. 
You  did  not  make  a  search  personally  of  the  RAI 



A     I  did  not  go  through  each  file.   I  gave  her  the 
list.   She's  the  one  who  works  with  the  files  on  a  daily 
basis.   I  then  looked  at  the  material  which  she  produced, 
provided,  checked  it  against  my  memory  to  see  if  there's 
anything  I  could  think  of  that  was  not  there.   And  that's  the 
way  the  work  was  put  together. 

Q     So  it  would  net  be  accurate  to  see  that  you  only 
want  on  what  Mrs.  Keating  produced,  because  you  also 
inventoried  your  own  memory  to  make  sure  that  her  production 
was  complete? 

A     And  on  the  financial  material,  and  so  forth. 






Mrs.  Shackley,  my  daughter  also  went  through  this.   You  know, 
I'm  a  small  company.   I'm  a  family-oriented  company.   My  wife 
works,  my  daughter  also  works  there.   They  also  went  through 
corporate  records,  financial  activity,  which  is  what  they 
deal  with  on  a  regular  day-to-day  basis.   For  instance,  like 
there,  our  W-2s  attached  there.   I  didn't  go  to  the  W-2  files 
for  the  various  years  and  pulled  them  out,  personally.   That 
was  done  by  Mrs.  Shackley.   The  computer  run  and  the  financial 
statement,  I  think,  was  done  by  my  daughter. 

Q     Let  me  break  down  what  we ' re  talking  about  into 
littler  bits  as  to  what's  in  the  box.   It's  your  testimony 
that  you  don't  remember,  having  cotpared   your  memory  with  each 
paragraph  of  the  subpoena,  anything  that  should  have  or 
would  have  been  in  ^K^  files  that  is  not  brought  forward  into 
this  box.  Exhibit  6? 

A     I  guess  I'm  not  making  myself  clear. 

MR.  MC  KAY:   The  other  caveat  obviously  is,  it's 
not  in  my  letter. 

MR.  HOLMES:   That's  the  next  caveat,  okay? 

Q     The  next  caveat  is  that,  as  you  have  stated 





through  your  attorney  in  what  is  Exhibit  5,  the  letter, 
there  are  certain  categories  of  things  that  you  have  not 
placed  in  the  box,  pursuant  to  some  concerns  that  you  and 
your  attorney  have;  is  that  accurate? 
A     That's  correct. 

Q     Let's  get  to  those  categories,  so  that  we  can 
complete  that  issue  here.   Then  we'll  simply  duplicate  it. 
We'll  duplicate  it  for  TGS,  I  assume.   Well,  let  me  ask  this 
question  now,  so  that  we  can  do  it  all  at  once. 

You  followed  the  same  procedures  and  exhibited 
the  same  concerns  with  TGS? 

A     Yes,  but  different  people  were  involved.   In 
other  words,  the  file  search  was  made  by  a  different  person. 
There's  a  main  file  search.   On  that  one,  the  financial 
records  and  stuff  were  done  primarily  by  Mrs.  Shackley. 

I  reviewed  that  material  that  was  provided' 
looked  against  the  subpoena,  tried  to  see  if  there  was 
anything  I  thought  had  been  missing  that  I  could  think  of. 

MR.  MC  KAY:   One  second. 

(Counsel  conferred  with  witness.) 

THE  WITNESS:   I'm  trying  to  convey  to  you  that 
a  lot  of  this  material,  you  know,  stacks  were  brought  in. 





and  someone  would  say,  "Hey,  look,  here's  a  file.   Like 
on  the  Kuwait  project.    "When  did  we  do  this  project." 
On  TGS,  you  know,  we  excluded  certain  categories  of  projects 
that  were  discussed  with  you. 

Q     Now  I  want  to  get  into  what's  excluded,  so  that 
the  record  will  accurately  reflect  what's  here  and  what's 
not  here,  so  that  we'll  have  that  information. 

Could  you  go  into  that  now,  for  the  purposes  of  . 
—  I'll  ask  you  which  is   easier  for  you.   Would  it  be 
easier  for  you  to  deal  with  it  with  RAI  and  TGS  together 
or  separately? 

A     I  think  we  have  to  deal  with  that  separately, 
because  the  issues  are  different. 

Q     Let's  start  with  RAI  and  tell  me  about  what's 
Hot  here  pursuant  to  the  subpoena. 

MR.  MC  KAY:   Let  me  just  state  that  we  tried  in 
the  attachment  to  the  letter  to  detail  what's  not  here. 
I  think  the  best  thing  he  can  do  is  to  go  back  to  the 
letter  and  tell  you  what's  there,  because  we  worked  in 
trying  to  list  everything  here.   I  don't  know  the  purpose 
of  trying  to  get  it  from  his  memory,  because  you  may  not 





get  as  accurate  a  list. 

MR.  HOLMES:   Thanks.   Maybe  it  would  save  time. 
Q     Mr.  Shackley,  you're  looking  at  what's  marked 
Exhibit  No.  5,  the  letter  and  its  attachment.   Have  you 
seen  that  letter  and  its  attacheroent  before? 
A     Yes. 

Q     It  was  prepared  by   you  and  with  your  knowledge? 
A     Yes. 

Q     And  it's  accurate  and  describes  truly  what  you 
did  and  what  you  included  and  what  you  didn't  include? 
A     That's  correct. 

Q     Fine.   We  don't  have  to  go  through  it  orally. 
Does  that  letter  —  I  didn't  recall  whether 
it  split  out  RAI  and  TGS. 

A     It  deals  with  —  here,  for  instance,  it  deals 
with  both  of  them. 

(A  pause. ) 

I  can't  find  what  I'm  looking  for.   Where's  the 
paragraph  here?  No. 

(Counsel  conferred  with  witness.) 

MR.  MC  KAY:   The  question  is  whether  the 





letter  or  the  attachment  treats  both  companies. 

THE  WITNESS:   The  answer  is  yes,  we're  trying  to 
respond  for  both  companies. 

Q     At  once? 

A     Right.   In  the  same  letter. 

Q     Let ' s  move  on  then  to  TGS . 

Could  you  describe  your  business  at  TGS  and  your 
affiliation  with  it? 

A     TGS  is  primarily  a  logistics  problem-solving 
company . 

Q     Could  you  explain  to  me  what  that  means? 

A     We  have  done  several  things.   We  have  been 
involved  with  modular  storage  equipment.   We  have  a 
relationship  with  the  Stanley  Vidmer  Company,  which  makes 
modular  storage  equipment.   The  rule  of  thumb,  basically,  is 
if  you  take  a  warehouse  and  you  have  open  shelving  in  it, 
you  can  reduce  the  floor  space  in  that  warehouse  by  50 
percent  by  going  from  open  storage  shelving  to  modular 
storage  shelving.   That's  the  kind  of  thing  that  we  have  been 
working  on  as  our  primary  activity. 

Q     What  other  activities  does  the  organization 





have?  ^ 

A     We  have  worked  on  local  construction  in  the 
Washington  Metropolitan  Area,  primarily,  home  remodeling 
kind  of  activities.   I  think  we  remodeled  one  small 
warehouse  also,  in  the  course  of  this  activity. 

Q     Do  you  do  that  with  your  own  employees,  or  is 
that  subcontracted  to  other  contractors? 

A     We  have  done  that,  basically,  with  our  own 
employees,  but  we  have  closed  that  out. 

When  we  were  doing  that  —  let  me  answer  you/- 
question.   When  we  were  doing  that,  we  were  doing  it, 
basically,  with  our  own  employees,  but  we  have  closed  that 
activity  out. 

Q     How  many  homes  did  you  remodel? 

A     I  don't  know.   I  would  have  to  go  look  at  the 
records.   I  think  we  did  that  around  here  for  maybe  about 

a  year. 

Q     Approximately  how  many  homes? 

A     I  have  no  idea.   I  really  couldn't  just  dredge 
it  out  of  my  memory.   It's  in  the  files.   But  it's  putting 
in  patios,  porches,  enclosing  opened  garages  to  closed 
garages,  upgrading.   I  have  no  idea.   It's  a  very  modest 






Q     And  each  one  of  those  homes  would  be  reflected 
in  the  TGS  file? 

A     The  volume  of  business  would  be  reflected;  yes. 
Q     But  not  the  owner  of  the  home? 
A     No. 

Q     No  invoices? 

A     I  don't  think  an  individual  breakdown;  no.       j 
The  individual  invoices  for  each  individual  job  that  we 
did  is  not  in  that,  I  don't  think.   I  don't  recall  it.      i 

MR.  MC  KAY:   The  only  way  it  would  be  there  is 
if  it  related  to  one  of  the  named  individuals,  because 
there  wouldn't  be  anything  that  asked  for  TGS's.   As  I 
read  the  subpoena,  it  is  a  description  of  his  line  of 
business.   If  there  was  anybody  on  the  list,  or  the 
named  individuals  for  whom  there  was  any  work,  that  would  hav« 
been  produced.   I  don't  think  it  was. 
(A  pause. ) 

MR.  HOLMES:   I  read  Attachment  a  to  read 
"Provision  of  any  service."   Remodeling  is  a  service. 
THE  WITNESS:   Well,  it's  reflected  in  our 
financial  reports,  and  so  forth,  but  not  breakdown  by 




any  individual  project.   "Enclose  the  garage  at  1011-5th 
Street"  or  something  like  that. 

MR.  HOLMES :   I  interpret  the  subpoena  to 
require  that  kind  of  invoice  or  whatever  you  call  it,  a 

MR.  MC  KAY:   If  you  interpreted  the  subpoena 
that  way,  that  would  mean  every  document  that  the  company 
ever,  because  its  business  is  providing  services.   It  would! 
be  every  business  deal  the  corporation  ever  had.  I 

MR.  HOLMES:   I'm  only  talking  about  a  very      j 
modest  number  of  homes. 

MR.  MC  KAY:   You  gave  us  a  list  of  50  or  60 
individuals,  and  we  responded  with  respect  to  those. 
I  assume  that  those  are  the  individuals  that  the  committee 
is  concerned  with,  and  not  that  Mary  Smith  had  her  garage 

enclosed  by  TGS  at  some  point.   I  didn't  interpret  it  to   • 

mean  every  service  provided  by  anybody  or  to  anybody,  and 

we  have  not  produced  every  garage  contract  or  whatever.    ; 

In  fact,  we  haven't  produced  any  of  those  contracts,       \ 

because  I  did  not  interpret  it  that  way.   If  there  was 

anything  for  any  of  the  50  or  60  nauned  individuals  or  50 

or  60  named  companies,  that  has  been  produced. 




39  ! 

BY    MR.    HOLMES: 

Q     Do  any  of  these  modifications  involve  electronics? 

A     No. 

Q     You're  talking  strictly  nonelectronic? 

A     I  mean  —  look,  if  you  put  in  --  in  .some  place,    ' 

I  think  we  may  have  put  in  a  garage  door.   Is  that  electronic,' 

because  you  have  a  door  that  electrically  raises,  you  know?   | 

No.   I  think  we  did  put  in  some  doors  in  the  course  of  these 

—  making  these  modifications.  i 

Q     All  right. 

A     I  mean,  if  you're  asking,  did  that  include        i 
installation  with  these  modifications  in  these  houses  of 
security  systems  —  is  that  what  you're  saying? 

Q     That  was  what  was  on  my  mind,  yes. 

A     No.   We  did  not  put  in  any  security  systems. 

Q     Other  than  the  modular  storage  and  local  [ 

construction,  does  TGS  engage  in  other  lines  of  business? 

A     Yes.   At  times  we  have  been  involved  in  food      '■ 

brokerage.  j 

Q     From  whom  to  whom? 

A     We  bought  food,  as  an  example, 

Q     Have  you  ever  brokered  food  originating  in  Iran? 





A     No,  I  have  not  brokered  any  food.   We  have  had 
some  correspondence,  and  the  files  are  in  there,  with  two 
Iranian  entities.   One  was  on  Iranian  caviar,  and  nothing  ever 
came  of  that.   We  couldn't  find  a  market  for  it.   And  the  other 
one  was  an  exchange  of  telex  correspondence  in  an  attempt  to 
see  if  food  supplies,  various  canned  foods  and  so  forth,  could 
be  produced  and  sent  to  Iran.   Nothing  came  of  that. 

Q     What  were  the  approximate  dates  of  these  two 
potential  — 

A     Can  I  look  at  the  files?   I  mean,  they're  in  the 

files . 

Q     Sure. 

MR.  HOLMES:   At  this  point,  why  don't  we  mark  the 
second  box.  Exhibit  No.  7. 

(Shackley  Deposition  Exhibit  7 
identified. ) 
THE  WITNESS:   There's  a  file  in  here  called 
GTC,  Government  Trading  Corporation. 
Q     That  relates  to  food  brokerage;  is  that  right? 
A     Yes.   This  was  GTC,  Government  Trading 
Corporation.   There  was  a  telex  sent. 




Q     What  is  GTC? 

A     It's  called  — 

Q     I'm  asking  you  — 

A     --  Government  Trading  Corporation. 
■  Q     It's  a  corporation? 

A     It's  an  Iranian  corporation.   It's  what  I 
understand  to  be  Government  Trading  Corporation.   That's  their 

Q     Is  it  a  government  corporation,  or  is  it  a 
group  of  Iranians  calling  themselves  GTC? 

A     They  buy  for  the  Iranian  government.  As  far  as 
I  know,  it's  a  governmental  trading  company,  an  Iranian 
governmental  trading  company. 

Q     Who  are  the  principals  of  GTC? 

A     I  have  no  idea. 

Q     Who  did  you  deal  with? 

A  One  of  my  associates,  Mr.  Monaga,  sent  a  telex 
here  to  the  managing  director  of  the  company.  I'll  spell 
his  name  for  you.   M-o-v-a-h-e-di-z-a-d-e-h. 

Q     And  nothing  came  of  this? 

A     No;  nothing  came  of  it. 

Q     Are  there  other  lines  of  business  that  TGS  is 






I    engaged   in? 


if     A     Okay.   The  food  brokerage.   I've  covered  those  with 
I  you;  right? 

I  All  right.   We  have  looked  at  various  items  that 


are  connected  with  logistics  problem-solving.   We  have  looked 

at  trying  to  get  furniture  requirements  to  Saudi  Arabia,  as 
an  example,  for  large  projects.   I  think  there's  corres- 
pondence in  here  on  several  such  attempts,  transactions. 

At  various  times  we've  looked  at  various  kinds  of  . 
airplane  transactions. 

Q     Do  any  of  those  airplane  transactions  that  you've 
looked  at,  whether  you've  completed  or  not,  involve  either 
a  military  style  airplane  or  a  transport  style  airplane? 

A     No.   Well,  I  don't  know.   What  do  you  consider 
a  747?  We  tried  to  look  for  747s  in  the  United  States  that 
would  be  bought  by  an  Italian  company  for  use  in  China. 

Q     For  use  as  transport  planes  in  China?  '  "■•, 

A     I  don't  know.   The  Chinese   had  not  made  up  their 
mind  how  they  wanted  them  configured.   They  were  looking 
at  various  configurations.   In  other  words,  that  was  one 
thing  that  caused  the  deal  not  to  go  anywhere.   The  Chinese 
were  looking  at  one  configuration  to  have  the  airplane 





passenger.   Another  configuration  was  to  split  the  airplane, 
to  have  it  passenger  and  cargo.   Another  configuration  was 
to  make  the  airplane  completely  cargo.   Let's  say,  at  some 
point  in  time,  which  I  think  is  prior  to  the  time  of  the 
subpoena,  I  think  we  may  have  looked  at  other  airplanes,  the 
Buffalo  airplane  out  of  Canada. 

Q     Is  that  Buffalo  related  to  the  Caravan? 

A     It's  that  type  of  an  airplane.   It's  probably  a 
civilian  version  of  something  like  the  C-123,  C-130. 

Q     Who  were  the  principals  involved  in  that  potential 

A     Let's  see,   I  think  that  was  —  I  think  that  might 
have  been  Honduras.   I'd  have  to  check  the  files. 

Q     They  were  the  buyer,  I  assume? 

A     Yes.   They  were  the  buyer. 

Q     And  you  were  dealing  with  a  manufacturer  in  Canada? 

A     Yes.   The  manufacturer.   I've  forgotten  the  name  of 
the  company  who  makes  those. 

1     DeHavilland  makes  the  Ccuribou. 

A     This  was  DeHavilland.   It's  the  Scune  company, 
deHavilland,  because  one  of  the  people  went  up  to  talk  to  than. 

Q     Why  did  deHavilland  need  somebody  to  broker  a  sale. 





since  they're  the  manufacturer? 

A     You  know,  a  lot  depends  on  the  market,  some  of 
these  markets,  where  they  are  only  sellinglone  /off (airplane , 
they're  not  pursuing  those  markets.   They're  looking,  you 
know,  they're  concentrating  on  the  market  where  they  can  sell 
four,  five,  six  airplanes.   If  you  come  in  with  sort  of  a 
one-off  arrangement  to  the  manufacturer,  they  frequently 
are  interested. 

So  you're  looking  for  that  unusual  opportunity 
or  opening. 

Q     When  was  this  discussion  or  series  of  discussions? 

A     That  was  prior  to  1982  but  I  don't  remember  whether 
that  was  in  '81  or  '80.   I  would  have  to  go  into  the  files. 
I'm  so  tired  of  looking  at  files.   I've  been  working  on  this 
so  long,  you  know,  that,  frankly,  I'm  exhausted,  and  I'm 
having  trouble  recalling  some  of  these. 

Q     Let's  get  away  from  files  a  little  bit  then. 

We  have  before  us  in  Exhibits  6  and  7,  the  records 
of  TGS  and  RAI  responsive  to  the  subpoena,  with  the  exception 
of  records  described  in  Exhibit  No.  5,  the  letter;  is  that 

A     Yes. 





MR.  MC  KAY:   That's  correct. 

Q     Now  I'd  like  to  know  whether  you,  Mr.  Shackley, 
personally,  have  access  to  records, in  addition  to  those  in 
6  and  7 ,  other  that  what ' s  described  in  5 ,  that  would  be 
responsive  to  your  personal  subpoena. 

MR.  MC  KAY:   The  subpoena  to  Mr.  Shackley  asked 
him  to  produce,  with  regard  to  API,  SSI,  TGS  and  Research 
Associates  International,  all  materials  relating  to. 

Are  you  asking  him  if  he  has  documents  regarding 
those  four  entities, that  are  not  produced? 

(Document  handed  to  counsel.) 

MR.  HOLMES:   That's  certainly  subsumed  in  my 
question,  but  you'll  notice  that's  only  one  category  out  of 
a  total  of  five  categories.   Category  number  3  is  very 
inclusive,  because  it  includes  the  appendix.   So  those 
qualifications  only  apply  to  category  nximber  one  out  of  five. 
If  you  would  like  to  answer  one  category  at  a  time,  I'll 
take  his  answer  like  that. 

MR.  MC  KAY:   Let  us  confirm  that. 
(Counsel  conferred  with  witness.) 

MR.  MC  KAY:   Why  don't  you  take  it  a  category  at  a 





time,  and  he'll  tell  you  what  he  did. 
Q     Okay,  Mr.  Shackley,  you're  looking  at  the  Shackley 
su±)poena .   I  guess  it's  Exhibit  No.  1. 

Now,  with  regard  to  subpart  number  1  on  Attachment 
A,  you've   just  answered  that  you  don't  have  anything  else  in 
your  personal  capacity  that  relates  to  that  category,  other 
than  what's  either  in  these  two  boxes  in  front  of  us  or 
excepted  from  the  boxes  by  the  letter. 

A     Yeah.   You're  looking  at  one,  API  Distributor 
System  Services. 

Q     Just  so  that  we're  clear  on  this,  you  have  said 
that  the  reason  that  you  haven't  produced  anything  with 
regard  to  API  or  SSI  is  that  you  have  no  obligation  to  do  so, 
not  being  an  officer  or  affiliated  with  those  corporations. 
MR.  MC  KAY:   We  didn't  interpret  it  that  narrowly. 
Q     But  if  you  had  records  belonging  to  or  relating  to 
those  companies  in  your  files,  they  would  be  called  for 
under  this  subpoena  in  your  personal  capacity.   You 
understand  — 

A     Well,  let  me  try  to  answer  this  another  way.   The 





records  of  those  companies  I  do  not  have. 

Q     That's  what  I  wanted  to  know. 

A  So  we  can  boil  that  down,  I  think,  to  the  essential, 
I  don  't  have  the  records  of  those  companies.  Those  records, 
the  last  I  know  of  them,  were  in  Mr.  Clines'  possession. 

Q     Before  we  go  further  on  the  description  of 
compliance  with  the  subpoena,  get  a  little  bit  into  what 
"have"  means.   You  understand  that  "have"  includes  have 
access  to  or  control  over  through  any  agent,  attorney,  your' 
wife,  friend,  a  safe  deposit  box,  a  storage  facility  of  any 

A     Uh-huh. 

Q     Anything  like  that,  any  control  like  that  would 
still  be  sufficient  control  for  you  to  be  obliged  to 
produce  it. 

You  understand  that? 

A     I  understand  that. 

Q     I  just  didn't  want  to  be  talking  past  you  on  this 
and  you  know,  I  haven't  got  it.   Good. 

A     Let  me  just  make   sure  that  you  understand  what 
I'm  saying.   The  last  time  I  saw  those  records,  the  corporate 





records  of  API  Distributors,  you  know.  Systems  Services 
International,  they  were  in  Mr.  dines'  possession.   They 
I  were  given  to  him.   They  were  his  records.   They  belonged 
to  a  corporation  that  he  owned. 

Q     When  was  the  last  time  that  you  saw  those  records? 
A     I  would  say  I  moved  up  to  ray  current  office  location 
in,  I  think,  in  January  of   1982,  and  thafs  sometime  prior 
to  1981,  would  have  been  the  last  time  that  I  would  have  seen 
any  of  those  records . 

Q     All  right.   While  we're  on  that,  while  that  subject 
is  on  the  table,  let  me  clarify  another  aspect  of  subpoenas. 
If  you  have,  in  the  broad  sense,  records  when  a  subpoena  is 
served  and  you  divest  yourself  of  control  of  documents  after 
the  subpoena  is  served,  that  doesn't  avoid  your  obligation  to 
produce  those  records. 

You  understand  that,  I'm  sure. 
A     Yes. 
Q     I  just  didn't  want  to  miss  that  possibility. 

All  right.  With  regard  to  subpart  number  2  of  your 
personal  subpoena.  Exhibit  1,  do  you  have  any  such  documents, 
in  the  broad  sease  of  "have,"  we  just  discussed? 

MR.  MC  KAY:   That  we  haven't  produced  or  that  are  not 





covered  by  the  letter. 

MR.  HOLMES:   Certainly. 

THE  WITNESS:   No.   I  think  we've  covered 
everything,  as  far  as  I  can  see.   I  don't  really  even  know 
what  you're  saying  here.   In  other  words,  on  2 ,  do  I  have 
any  documents  on  —  I  may  have  a  newspaper  clipping  or 
something.   I  don't  know. 

MR.  .MC  KAY:   He's  asking  about  personal  files.' 

THE  WITNESS:   Personal  files?   No. 

Q     The  reason  this  comes  up,  Mr.  Shackley,  is  that 
you've  come  forward  in  response  to  five  subpoenas  with  two 
boxes  of  records,  each  box  identified  to  a  particular 

A     Uh-huh. 

Q     As  to  the  other  two  corporations,  you  say,  no 
proper  service  really.   You're  asking  the  wrong  guy. 

MR.  MC  KAY:   I  don't  think  we're  saying  that  at 
all.   We're  saying  he  doesn't  have  any  documents.   That's 
what  my  letter  says. 

MR.  HOLMES:   That's  those  two  corporations. 
Then  we  have  these  two  corporations.  Exhibit  6  and  7.   And 





what  I'm  pointing  out  is,  that  you  have  a  totally 
independent  personal  obligation  under  your  personal  subpoena 
to  produce  any  documents,  whether  it  has  to  do  with  these 
corporations  or  not,  or  in  your  capacity  as  a  corporate 
officer  or  not,  simply  because  you  have  control  of  documents 
described  by  the  subpoena.   I  am  confident  that  you 
understood  that,  but  I'm  making  it  clear  that  I'm  asking 
for  documents  under  the  personal  subpoena  now  and  not  under 
either  or  any  of  the  four  corporate  subpoenas. 

THE  WITNESS:   I  told  you  I  don't  have  the 

Q     Let  me  reask  the  question. 
A     Am  I  missing  something? 
Q     That's  what  I'm  trying  to  find  out. 
A     I'm  not  following  you,  because,  for  instance,  I 
don't  have  any  files.   I've  told  you  I  don't  have  any  files 
for  API.   I  don't  have  any  for  SSI.   The  files  that  are 
pertinent  in  relationship  to  these  subpoenas  that  deal  with 
our  RAI,  TGS  and  my  business  with  those  companies  have  been 
produced.  ~ 

Q     And  if  we  assume  that  to  be  the  case,  which  we 





do  at  this  point,  the  same  inquiry  is,  do  you  have,  in  any 
personal  capacity  or  any  control  whatsoever  over  any 
documents  described  in  2  through  5  of  your  personal 
subpoena,   which  are  not  limited  to  those  four  corporations 

A     No,  I  don't.  Citizens  Held  Hostage.   Everything 
that's  Citizens  Held  Hostage  is  in  the  RAI  files.   Going  down 
this  thing,  I  don't  have  any  Assistance  to  Nicaragua.   I've 
told  you  that. 

Q     Not  exactly,  Mr.  Shackley.   And  I  don't  want  to 
be  inordinately  technical,  but  if  I  understand  what  you're 
saying,  it's  not  exactly  what  the  subpoena  asks  you  for. 
You  have  said  in  your  opening  statement  that  you  didn't 
supply  anything  to  Nicaragua,  but  that's  not  what  this 
subpoena  asks  for.   It  asks  for  any  documents  relating  to 
anybody's  doing  any  of  these  things,  you  or  anybody  else 
in  the  world. 

A     I  don't  have  anything  on  anybody  doing  anything 
in  Nicaragua,  which  are  documents. 

MR.  MC  KAY:   That's  not  produced? 

THE  WITNESS:   That's  not  produced. 

I've  written  a  book  on  guerrilla  warfare.   Maybe 





I've  got  some  newspaper  clippings,  but  that's  not  applicable. 

Q     Well,  it  would  be  applicable,  but  I'm  willing  to 
concede  that  your  book  and  your  newspaper  clippings  are  not 
something  that  we  want. 

MR.  MC  KAY:   He's  asking  —  for  instance,  I 
suppose  if  you  had  a  letter  at  home  in  your  files  relating 
to  selling  food  to  Iran,  because  it's  one  of  the  countries. 

THE  WITNESS:   No,  I  don't. 

MR.  MC  KAY:   He's  asking  if  you  have  anything, 
just  because  it's  not  in  the  corporate  files  —  he's  trying 
to  make  sure  that  we  produced  anything  in  your  personal 
files . 

THE  WITNESS:   I  have  nothing  on  this  attachment  1. 
I  have  nothing  on  any  of  these  people.   I  have  nothing  on 
any  of  these  corporations.   I  told  him  that  I  corresponded 
with  CIA  on  clearing  articles  that  I  published.   I  think 
I've  published  some  articles  since  1982,  which  stated  that 
—  you  know,  I  don't  have  it. 

Q     In  particular,  drawing  your  attention  to 
subsection  3,  it's  your  testimony  that  you've  gone  down  the 





whole  appendix  in  its  various  parts,  and  you  have  nothing 
relating  to  any  of  those  individuals  of  entities,  other 
than  what's  in  these  boxes. 

It  just  strikes  me  — 

MR.  MC  KAY:   You've  got  a  time  frame,  first  of 

Q     Yes.   Within  the  time  frame. 
A     January  1982.   For  instance,  on  the  lawsuit  — 

MR.  MC  KAY:   That's  described  in  the  letter. 

THE  WITNESS:   That's  in  the  letter. 

MR.  MC  KAY:   But  again,  he's  asking  if  it's  not 
in  a  file  back  at  TGS  or  RAI  that's  a  corporate  file,  have 
you  got  a  document  in  some  other  file  that's  about <» I  Wfc 
*»*  or  any  of  these  people? 

THE  WITNESS:   No,  I  don't  have  a  file  on  Awron  Near 
or  any  of  these  people,  any  of  these  entities. 
Q     Or  any  of  these  entities?   Any  of  these  people 
or  entities  described  in  the  appendix  at  all? 
A     No. 
Q     You  have  a  remarkably  file-free  life. 





A     Why  would  I  have  it? 

MR.  MC  KAY:   On  the  contrary,  he's  got  lots  of 
i;   files.   That  was  one  of  the  problems. 
Q     Let  me  explore  with  you,  apart  from  the  subpoena 
production,  your  relationship  with  some  individuals  that 
have  importance  to  our  investigation. 

I  will  clarify  for  you  that  when  I  ask  questions 
apart  from  the  subpoena,  I  am  not  limiting  my  question  to 
1982  or  any  wording  in  the  subpoena.   We're  just  talking 
strictly  the  question  of  —  the  question  you  hear  is  the 
question  I'm  asking,  unfiltered  through  the  subpoenas. 

MR.  MC  KAY:   I  would  interpose  an  objection  at 
the  time  it  comes  up.   I  don't  even  want  to  know  why  the 
committee  is  interested  back  to  '82,  but  if  we  are  going  to 
go  back  into  the  '70s,  I  really  have  a  serious  relevance 
question  about  what  it  has  to  do  with  what  the  committee's 
investigating . 

MR.  HOLMES:   If  there's  a  problem  with  a 
particular  question,  let  me  know.   It  seems  perfectly 
clear  to  me,  for  example,  if  I  ask  about  a  relationship 
with  Secord,  and  it  predates  1982,  then  that's  relevant. 




MR.  MC  KAY:   We'll  take  care  of  it  when  it  comes 


Q      I'd  like  to  begin,  Mr.  Shackley,  by  asking  you 
about  your  past  dealings  with  various  principals  in  the 
investigation.   I'd  like  to  start  with  Mr.  Hakim,  Albert 

Have  you  met  Mr .  Hakim? 

A     Yes.   I've  met  Mr.  Hakim. 

Q     When  did  you  first  meet  him? 

A     I  don't  remember.   It  was  when  I  was  still  in 
the  Agency. 

Q     What  were  the  circumstances  of  your  meeting? 

A     Let's  see.   If  I'm  not  mistaken,  Ed  Wilson 
introduced  me  to  him. 

Q     Where? 

A     In  a  Washington  restaurant. 

Q     What  was  the  occasion? 

A      HakiiB  was  introduced  to  me  as  an  individual  who 
was  knowledgeable  about  current  developments  in  Iran. 

Q     What  time  period  are  we  taking  about? 

A     I  don't  remember  what  year  that  was.   It  could  be 





MR.  MC  KAY:   I  don't  want  you  to  guess.   Before 
1979,  obviously. 

THE  WITNESS:   We're  talking  back  a  long  period  of 
time.   It  could  have  been  -- 
Q     Maybe  if  you  could  place  the  events  that  he  was 
supposed  to  be  knowledgeable  about. 

A     It  was  the  conditions  in  Iran. 
Q     The  imminent  fall  of  the  Shah,  perhaps? 
A     No.   Let  me  just  see  what  it  was. 
(A  pause.) 

No.   Maybe  1976,  1977.   Somewhere  in  that  period, 
but  I  can't  really  pin  it  down,  and  look  — 

Q     If  you  need  to  qualify  an  answer  like  that,  that's 
no  problem  at  all. 

A     I  can't  pin  it  dovm. 

Q     I  just  want  to  know  whether  we're  talking  aOsout 

A     No,  no.   I  can't  pin  it  down.   But  I'm  sure,  if 
you're  interested,  you  can  find  the  records  and  names. 
Q     Was  anybody  else  present  at  the  meeting? 
A     I  don't  recall  at  this  time.   I  mean,  I  remember 





meeting  Hakim.   I  remember  having  lunch  with  him.   I  remember 
writing  up  a  report  on  it. 

Q     Your  meeting  was  reported  to  the  CIA,  then? 

A     Yes. 

Q     Through  what  channels  would  that  have  occurred? 

A     I  don't  know, the  CIA.   I  came  back,  I  wrote  a 
memorandum  and  put  it,  you  know,  the  normal  distribution 
mechanism.   I  probably  sent  it  to  the  Geographic  Area 
Division  for  them  to  look  at  and  to  take  any  action  that's 

Q     Were  you  recommending  any  action? 

A     No.   I  reported  what  had  been  told  to  me  and 
what  I  recall  of  the  sequence  of  events.   The  people  in 
Iran  carae  back  and  said  they  weren't  interested.   They  had 
better  contacts,  and  that  was  the  end  of  it. 

Q     Weren't  interested  in  what? 

A     Weren't  interested  in  his  contacts,  the  contacts 
that  he  had  in  Iran. 

Q     The  idea  was  that  Hakim  would  be  willing  to 
supply  information  to  the  OIA  on  developments  in  Iran? 

A     No.   I  met  him.   He  talked  about  his 
circumstances  in  Iran.   I  asked  him  who  he  knew,  what 





kind  of  business  he  was  in,  and  so  forth.   I  simply  took 
note  of  all  of  that  and  tried  to  access  what  utility  that 
could  be.   I  put  it  into  the  Geographic  Area  Component. 
They  came  back  in  a  short  period  of  time  and  said  they 
weren't  interested,  and  that's  where  it  dropped. 

Q     I'm  still  missing  what  they  weren't  interested  in. 
They  weren't  interested  in  knowing  anything  that  Hakim 

A     No.   They  weren't  interested  in  pursuing  it,  in  . 
other  words . 

Q     "Pursuing  it"  would  mean  developing  Hakim  as 
a  reporting  source? 

A     Or  getting  him  to  introduce  them  to  a  particular 
individual  that  he  might  have  known  in  Iran,  so  they  could 
develop  that  individual. 

In  other  words,  they  simply  felt  that  they  had 
that  sector  covered,  and  I  simply  let  it  drop. 

Q     What  relationship  did  Wilson  have  with  Hakim  at 
that  time? 

A     They  were  in  some  sort  of  business  together. 

Q     Do  you  know  what  business  it  was? 

A     No.   I  know  they  were  in  business  or  had  done 





some  business,  but  I  don't  recall.   I  know  Hakim  has  said 

:i  since  then,  I've  heard  him  say,  you  know,  I  can't  pji  it  down, 
what  year,  what  date,  but  I  know  that  he  sued  Wilson  over 
something  in  this  dispute  that  they  had.   So  I  know  they  were 
in  business  together. 

Q     In  your  recommendations,  did  you  recommend  any 
particular  person  or  type  of  individual  to  try  and  operate 
through  developing  Hakim's  information? 

A     I  have  no  recollection  of  that. 

All  I  recall  is  a  meeting,  writing  it  up,  turning 
it  in.   Nothing  came  of  it.   I  accepted  the  judgments  that 
were  exercised  by  the  people  at  that  time.   They  said  they 
weren't  interested  in  pursuing  it,  and  I  let  it  drop. 

Q     Had  you  known  of  Hakim  before? 

A     No. 

Q     You  never  heard  his  ncime? 

A     No.   I  think  probably  the  way  this  occurred  was, 
you  know  —  "I'd  like  you  to  meet  an  interesting  guy  or  have 
lunch  with  an  interesting  guy  who  has  something  to  do  with 
Iran.   Why  don't  you  come  around  and  talk  to  him?" 

Q     And  since  that  time,  when  was  your  next  contact 
with  Hakim  or  Hakim's  name? 





A     I  don't  have  —  sometime  probably  in  1980,  after 
I   I  retired,  is  when  I  next  remember  seeing  him  or  meeting  him. 
I  Q     You  haven't  hea^  of  him  in  the  meantime? 

A     I  don't  recall  any,  you  know,  conversations  about 
him.   He  certainly  was  not  on  any  kind  of  thing  that  I  was 
concerned  about.   I  just  don't  have  any  memory  of  him.   I 
remember  meeting  him  once.   I  have  no  memory  of  the  man  until 
after  I  retired. 

Q     What  is  your  next  memory  of  him? 

A     My  next  memory  of  him  is  after  I  retired.   As  I 
recall,  he  called  me  up  in  Washington  and  said  he  was  in 
town  and  would  like  to  get  together. 

Q     Did  you  meet  with  him? 

A     Yes,  I  did. 

Q     Was  anybody  else  there? 

A     I  don't  recall. 

Q     That  was  like  another  restaurant  type  meeting? 

A     Yes.    It  was  just  a  matter  of  getting  acquainted. 
"I  understand  you're  retired.   What  are  you  doing?" 

Q     Did  he  tell  you  what  kind  of  businesses  he  was 
involved  with? 

A     I  think  at  that  time,  he  was  primarily  interested 





in  the  electronics  business. 

Q     Did  he  tell  you  what  his  electronics  business 
might  have  that  might  be  of  interest  to  you? 

A     I  don't  recall  at  that  time  that  coming  up, 
because  I  had  a  brief  meeting,  and  this  is  many  years  ago. 
I  don't  recall  that.   At  some  later  point,  yes,  I  knew  he  had 
a  company  called  Stanford  Technology.   I  don't  think  that 
came  up  at  this  thing.   I  don't  remember  that. 

Q     I  don't  want  to  presume  something  in  the  meeting 
that  wasn't  there,  but  it  seems  like  if  the  guy  was  going 
to  call  you  to  get  acquainted,  you  would  come  away  from 
the  meeting  with  some  idea  of  what  it  was  that  he  thought 
would  be  of  mutual  benefit  to  you  too. 

A     He's  a  guy  who  likes  to  be  in  touch  with  a  lot 
of  people.   He's  always  looking  at  business  opportunities, 
and  you  know,  I  told  him  what  I  was  doing  at  that  particular 
time.   I  was  concentrating  on  the  oil  field  equipment 
business,  API  Distributors,  looking  at  the  Mexican  market. 

Q     Would  it  be  fair  that  your  assessment  of  the 
meeting  was  that  you  were  simply  exchanging  knowledge  of 
each  other's  whereabouts  and  abilities  for  future  possible 





A     I  don't  think  it  was  for  any  future  possible 
'I  reference.   It  was  just  get  acquainted,  what  are  you  doing? 
And  what  are  you  up  to?   That's  all.   I  can't  read  anything 
else  into  it.   I  don't  have  any  other  memory  of  it.   I  just 
remember,  meeting  him  and  having  a  chat  with  him. 
Q     When  did  you  next  hear  of  him? 

A     I  next  heard  of  him  after  —  sometime  after  the 
Iran-Iraq  War  broke  out.   The  Iran-Iraq  War  started  in 
September  1980. 

Q        So  your  second  meeting  with  him  would  have  been 
after  September  of  '79  and  before  September  of  '80? 

A     Probably  somewhere  in  that  time  frame..   I  remember 
sort  of  meeting  him  and  then  again  after  the  Iran-Iraq  War 
broke  out. 

Q     How  did  this  meeting  occur? 

A     I  think  he  was  in  Washington  and  simply  called  me 
up  on  the  telephone.   That's  my  memory  of  it. 
Q     And  there  was  a  meeting? 
A     Yes,  there  was  a  meeting. 
Q     Who  else  was  present? 

A     I  don't  recall  anybody  else  being  present. 
Q     What  was  the  purpose  of  this  meeting? 





A     He  was  interested  in  the  Iran-Iraq  War. 

Q     What  was  his  interest? 

A     His  interest  was  essentially  in  monitoring 
developments  in  that  war. 

Like  a  lot  of  people.  When  the  war  started  in 
September  1980,  it  was  believed  that  it  was  going  to  be  a 
very  short  war.   A  lot  of  people  were  out  monitoring 
developments  in  the  war,  particularly  monitoring  what  was 
happening  to  industrial  activity  in  Iran. 

Q     Meaning  the  degree  of  destruction  of  the 
industrial  base? 

A     Right.  One  thing,  as  an  example,  that  a  lot  of 
people  were  interested  in,  I  remember  Hakim  was  also 
interested  in  it,  was  the  Abadan  Refinery.   The  thought  at 
that  time  was,  that  if  the  war  was  short  and  you  could 
figure  out  how  much  damage  was  done,  you  could  go  in 
quickly  and  put  together  a  proposal  for  the  repair  of  that 
refinery  and  put  it  back  into  operation.   And  as  I  was 
working  in  oil  field  equipment-related  areas  and  activities, 
and  we  were  talking  about  the  war  and  the  oil  business,  I 
was  also,  at  this  point  in  time,  pretty  well  convinced  that 
the  oil-field  equipment  wasn't  going  to  go  anywhere.   I  was 





going  to  go  off  and  do  something.   I  primarily  had  made  up 
my  mind  I  was  going  to  work  in  the  risk  analysis  arena. 
So  that  is  the  kind  of  conversation  we  had. 
Q     At  this  point,  I  gather,  your  mutual  benefit 
is  sort  of  more  clear,  since  you  are  in  the  oil  equipment 
business,  and  he's  thinking  about  the  sale  of  oil  equipment 
to  Iran,  after  the  war  is   over. 

Was  that  the  gist  of  the  conversation? 
A     No.   I  think  you're  trying  to  read  into  all  of 
these,  you  know,  much  more  than  there  is.   People  meet. 
They  simply  discuss  things,  and  it  doesn't  necessarily  have  to 
be  any  future  content  to  one  of  these  discussions.   I  mean, 
there's  not  a  commitment.   I'll  meet  you  for  lunch  today,  and 
we're  going  to  do  a  deal  six  months  from  now. 

Q     Oh,  well,  no.   I  didn't  mean  to  imply  a 
commitment  or  anything  like  that.   It's  just  that  you  would  i)e- 
an  obvious  guy  to  get  together  with,  now  that  he's  thinking 
about  the  Ahadan  refinery. 

A     Well,  he  was  interested  in  monitoring  the  war  and 
that  aspect  of  it. 

Q     Did  he  want  you  to  do  anything  in  particular  in 
relation  to  monitoring,  like  provide  what  you  were  thinking 





of  getting  involved  with,  risk  analysis? 

A     No.   I  don't  think  at  that  particular  point  in 
time,  but  somewhere  after  the  war  had  been  on  for  a  while, 
and  I  had  gone  ahead  and  gotten  into  the  risk  analysis 
business,  I  did  talk  to  Hakim  about  monitoring  the  war  for 
him,  and  I  did  enter  into  a  relationship  with  him,  where 
I  did  provide  him  with  reports  on  the  war  and  on  general 
tends  in  the  Middle  East. 

Q     When  did  that  begin,  approximately? 

A     Maybe  19  —  let's  see.   The  war  started  in  1980. 
It  was  probably  sometime  in  1981,  the  best  I  can  recall. 

Q     Was  there  a  contract  memorializing  that  under- 
standing, or  did  you  simply  begin  selling  the  risk  analysis 

A     I  think  we  had  discussions  of  various  art  forms 
under  which  we  could  cooperate,  but  what  we  finally  worked 
out  was  that  I  was  paid  a  retainer,  so  much  per  month.   I 
think  there  are  some  invoices  in  the  files. 

Q     That  would  be  the  retainer,  plus  office  expenses, 
plus  travel  expenses,  plus  secretarial? 

A     Well,  no.   It  was  essentially  a  retainer  fee.   If 
I  traveled,  you  know,  I  was  reimbursed  for -travel  expenses. 





Q     All  right.   And  I  recall  seeing  soine  invoices 
like  that  that  had  flat  rate  for  secretarial,  office, 
overhead  type  of  thing. 

A     That's  another  item.   I  also  worked  with  him  and 
provided  office  space  for  an  individual  that  he  was  also 
using  the  monitor  the  war.   Mr.  Razmara.   He  was  paying 
Mr.  Razmara  a  retainer,  and  I  was  billing  him  for  the 
secretarial  services,  office  space  and  other  things  that  were 
being  used  by  Mr.  Razmara. 

Q     Let's  work  back  from  Razmara. 

Was  Razmara  a  person  that  you  knew  first  or  Hakim 
knew  first? 

A     That  I  don't  know.   I  don't  know  the  answer  to 
that  question. 

Q     Did  Razmara  ccxne  to  you  as  a  person  that  Hakim 
wanted  to  help  monitor  the  situation,  or  was  he  somebody  that 
was  already  on  your  staff,  and  Hakim  said,  well,  I'll  pay 
you,  and  I'll  pay  Razmara? 

A     No.   I  knew  Mr.  Razmara  and  Mr.  Hakim  knew 
Mr.  Razmara.   Which  came  first,  the  chicken  or  the  egg,  I 
don't  know.   I  met  Mr.  Razmara  after  he  became  an  exile  in 
the  United  States.   I  had  seen  him  once  or  twice. 





Q     I  assume  that  was  shortly  after  the  fall  of  the 

A     Yes.   That  would  have  to  be,  I  don't  know,  maybe 
'81,  '82.   I  can't  put  any  dates  on  it  any  closer  than  that. 
That's  the  first  time  I  recall  meeting  him  here  in  the  States. 

Q     I'm  sorry.   I  asked  the  question  inartfully.   That 
got  us  a  little  bit  off-base. 

Just  tell  me  how  it  came  to  pass  that  you  and 
Razmara  were  both  sitting  in  office  space  in  Rcjglyn   working. 
for  Hakim  as  consultants  on  the  war. 

A     Well,  as  I  told  you,  I  met  Razmara  here  in 
Washington.   He  was  looking  for  a  job.   I  think  he  did  some 
analytical  work  for  me.   I  probably  paid  him  a  minor  retainer 
of  some  sort. 

Q     That  was  before  he  was  working  for  Hakim? 

A     Then  Hakim  and  Razmara  got  together  somehow.   I 
don't  know  how  they  got  together,  maybe  through  some  other 
friends.   I  simply  can't  recall.   I  don't  know.   If  you're 
interested  in  pursuing  it.   Call  in  Razmara  and  call  in 
Hakim.   I  don't  know. 

Then  Hakim  was  interested  in  covering  that  war  and 
was  interested  in  some  of  Mr.  Razmara 's  contacts  in  the 






Middle  East  looking  for  business,  and  he  came  to  me  with  a 
proposal.   "How  about  providing  office  space,  secretarial 
space,  and  so  forth,  for  Mr.  Razmara?" 
That's  what  I  did. 

Q     That's  what  I  wanted  to  know.   It  was  Hakim  that 
brought  Razmara  together  with  you  for  this  opportunity? 

A     No.   We  were  already  in  touch,  but  that's  my 
best  recollection  that  he  came  up  with  some  sort  of  a 

Q     Were  you  and  Razmara  supposed  to  be  working 
independently  of  each  other  on  the  project,  getting  paid 

A     Mr.  Razmara  was  getting  paid  through  me.   In  other 
words,  I  was  doing  it  as  an  accommodation.   Hakim  was  paying 
me  the  retainer  that  I  was  on.   He  was  paying  me  for  the 
invoices  I  was  billing  him  for.   Mr.  Razmara ' s  secretarial 
things,  and  so  forth.   And  then  I  paid  Mr.  Razmara. 

Q     I  see.   Did  Razmara  do  any  other  work  for  you, 
in  addition  to  the  Hakim  work? 

A  No.  But  we  exchanged  —  I  mean,  it's  like  a 
cross  rep.  He  might  make  a  call  to  somebody  to  talk  to 
somebody  about  Iran  or  the  Iraq  War.   I  had  some 




information.  We  poouLed  our  information.  We  discussed  it, 
and  this  was  probably  a  synthesis  of  the  two  that  ended  up 
in  a  product. 

Mr.  Razmara's  English,  spoken  English,  is  very 
good.   He's  a  graduate  of  a  U.S.  university.   He  doesn't 
write  English  all  that  well.   He  would  write  reports.   We 
would  edit  them  for  them  and  put  them  into  English. 

Q     All  right.   How  long  did  this  relationship  with 
Hakim  continue  as  regards  to  yourself? 

A     There  are  invoices  in  billings  there.   You  can 
check  the  file.   I  think  maybe  198  2,  somewhere  in  that 
period.   Although  maybe  we  didn't  get  our  last  payments  from 
him  until  1983. 

Q     It  ended  in  '82  or  '83  then? 

A     Yes.   I  would  say  probably  December  of  '82,  but  we 
may  have  still  had  correspondence  with  him.   He  was  a  slow 
payer.   I  mean,  you  know,  it  just  took  him  a  long  time  to  pay 
his  bills,  and  I  think  maybe  I  had  correspondence  with  him 
running  through  1983  on  that. 

Q     What  was  the  reason  for  your  discontinuation  of 
that  relationship? 

A     Basically,  because  it  was  clear  that  the  war  was 




going  t*  go  on,  you  know,  for  a  long  period  of  time,  and  his 
original  concept  and  interest  in  business  stemming  from  that 
war  just  wasn't  realistic. 

Q     So  he  was  the  one  who  decided  that  it  was  just 
not  economically  a  good  idea? 

A     Well,  I  think  I  also  said,  you  know,  look,  this 
is  not  going  to  be  a  short-term  war.   By  then  it  was  pretty 
clear  that  the  war  was  going  to  be  a  long  war.   You  know,  I 
think  I  told  you  this  story  once  before,  so  I'm  going  to 
bore  you  with  the  story.   People  say  they  are  either  hunters 
or  farmers  in  the  business  world.   A  farmer  is  somebody  like 
me  who  plows  the  furrows  and  gets  a  minor  retainer  for  doing 
something.   A  hunter  is  the  guy  who  goes  out  and  looks  at 
one  big  project.   He  may  chase  the  big  project  for  three 
years  before  he  brings  it  in. 

Mr.  Hakim  is  a  hunter;  I'm  a  farmer. 
I  can  see  that  this  big  project  at  Abadan  wasn't 
going  anywhere.  Every  day   Abadan  was  being  more  and  more 
destroyed.   So  I  said,  "Look,  Albert,  this  isn't  going 
anywhere . " 

Q     This  field  is  barren  for  now  and  come  back  later? 
A     It  was  just  not  going  anywhere. 





Q     All  right.   And  he  discontinued  his  payments  to 
Razmara  around  the  same  time,  I  take  it? 

A     Yes.   As  far  as  I  can  remember;  yes. 

Q     Did  Razmara  remain  with  you? 

A     Yes.  Razmara  has  remained  with  ite,  aid  we've  had 
different  kinds  of  relationships.   For  instance,  he  is  a 
shareholder  in  TGS  International. 

Q     When  did  he  become  a  shareholder? 

A     In  this  documents.   Look  it  up.   I  mean,  I  don't 
remember  all  these  dates. 

Q     Sure.   I  just  wanted  to  know  whether  it  was 
before  or  after. 

A     It  was  after,  at  some  point  when  we  were  involved 
in  operations  in  Kuwait. 

Q     Returning  our  focus  to  Hakim,  have  you  had  any 
other  relationships  with  Hakim? 

A     Yes.   I  think  over  the  years. 

Q     When  was  the  next  contact  you  had  with  Hakim  from 
the  beginning  of  your  risk  assessment  program? 

In  other  words,  branching  off  from  there,  what 
others  were  there  from  that  point  forward? 

MR.  MC  KAY:   I  don't  understand  the  question. 



!^  imuLA 

m-     " 


THE  WITNESS:  No,  I  don't  either.   I  just  told  you. 

Q     There's  a  period  of  time  toward  the  end  of  1980 
until  the  end  of  '82  or  the  beginning  of  '82,  when  you're 
working  with  Hakim  on  risk  analysis;  correct? 
A     Uh-huh. 

Q  I  don't  you  to  start  after  the  end  of  that 

relationship;  I  want  you  to  start  after  the  beginning  of  that 
relationship  and  tell  me  what's  the  very  next  contact,  other 
than  that  relationship, that  you  had  with  Hakim. 

MR.  MC  KAY:   In  the  time  frame  when  he  was  doing 
the  risk  analysis,  what  else  was  he  talking  to  Hakim  about? 
MR.  HOLMES:   Yes.   Do  you  understand  that? 
THE  WITNESS:   No,  I  don't. 

MR.  MC  KAY:   He's  taking  that  time  frame  when 
you're  doing  the  Iranian-Iraqi  War  analysis  and  asking  if 
you  had  other  business  dealings  with  Hakim. 

THE  WITNESS:   No,  I  don't  think  I  had  any  other 
business  with  him. 

Q      I  don't  want  to  be  quite  that  specific,  because 
in  the  world  of  a  hunter,  business  is  sometimes  defined  as 





something  that  brings  in  money,  but  my  interest  is  in  any 
Ij  kind  of  discussions  at  all  that  may  have  been  with  Hakim,  in 


the  hopes  of  bringing  in  money  or  even  in  the  hopes  of 
maybe  further  contract. 

A     I  don't  know  what  specifically  you're  searching 
for.   Obviously,  you're  searching  for  something. 

Q     I'm  just  on  scan  at  the  moment. 

A     I  did  risk  analysis.   The  next  thing  that  I  can 
remember,  and  I  can't  pin  it  down  to  a  specific  date,  and  so" 
forth,  is  that  I  had  some  discussions  with  Hakim  about 
modular  storage  equipment,  sale  of  modular  storage  equipment, 
where  that  could  be  done. 

Q     Was  there  any  particular  country  discussed  in 
regard  to  modular  storage? 

A    There  were  several  countries  discussed  at  one 
time,  and  there  is  some  correspondence  in  there  with  him  in 
the  TGS  files  on  modular  storage.   For  Egypt,  I  think  I  may 
have  talked  to  him  about  modular  storage.   I  don't  have  any 
correspondence  that  I  can  recall,  but  I  may  have  talked  to 
him  about  modular  storage  for  places  like  the  United  Arab 
Emirates.   Maybe  some  other  customers  in  the  Middle  East 
that  I  can't  recall  at  this  particular  point  in  time. 





Q  All  right.  And  nothing  actually  was  built  as  a 
result  of  these? 

A  Nothing  was  built.  We  got  no  contracts  out  of 
any  of  that. 

Q     Did  this  relate  in  any  way  to  Marwais? 

A  No.  This  was  Stanley  Vidmar.  Modular  storage. 
The  Marwais  thing  doesn't  appear  until  much  later. 

Q     Let's  move  forward. 

A     He  was  involved  --  Hakim  was  involved  in  Korea. 
He  was  doing  some  projects  in  Korea.   He  was  a  subcontractor 
on  a  Westinghouse  contract  for  a  nuclear  power  plant,  I  think, 
in  Korea. 

Q     What  was  the  business  opportunity  that  was 
discussed  with  you? 

A     Analysis  of  what  kind  of  security  systems  should 
be  put  in  there. 

Q     So  you  were  assisting  his  subcontracting  role? 

A  I  didn't  actually  assist  him.  I  talked  to  him 
about  it.  I  think  I  looked  --  may  have  looked  at  some  of 
the  specs,  but  I  never  really  worked  on  the  project. 

Q     Were  you  ever  paid  or  reimbursed  expenses? 

A     No,  not  that  I  recall.   I  have  no  memory  of  that. 



« ,oo,nt , 

I  don't  recall  ever  being  involved  with  him.   You  know,  I 
talked  with  him  about  it.   We  looked  at  it. 

Q     Did  you  ever  travel  to  Korea? 

A     No.   I  have  been  to  Korea  but  not  with  Mr.  Hakim. 
I  mean,  when  I  was  in  the  government,  you  know,  1  traveled 
to  Korea. 

Q     In  addition  to  the  Korea  —  approximately  when 
was  the  Korea? 

A     I  don't  know.   He  had  several  projects  in  Korea.  , 
I^ow  we  talked  to  him.   And  I  can't  put,  you  know,  a  date 
on  these.   It's  very  hard  to  put  dates  on  these  things.   He 
had  the  power  plant  thing  he  was  looking  at,  and  I  know  that 
I  tried  to  talk  him  into  a  modular  storage  package  for 
Korean  Airlines  and  some  helicopters,  and  so  forth,  that 
the  Koreans  were  going  to  build.   Nothing  came  of  that. 

Q     The  Koreans  were  going  to  build  helicopters? 

A     Assemble  maybe  is  a  better  word.   Assemble,  put 

Q     What  kind  of  helicopters? 

A     I  don't  remember  which  company  it  was.   There's 
additional  correspondence  in  there.   It's  in  the  files. 

Q     In  the  TGS  file? 





A  Yes. 

Q     Go  ahead  with  your  narrative. 

A     I'm  just  trying  to  think  what  else  in  Korea. 
Oh.   There  was  a  —  at  one  time,  I  corresponded  with  him  and 
talked  to  him  about  a  radar  project  for  Trinidad  and  Tobago. 

Q     Let's  start  at  the  beginning  of  that. 

What  was  your  first  inkling  that  there  was  such  a 
thing  as  a  radar  project  for  Trinidad  and  Tobago? 

A     Bill  Colby  called  me  up  on  the  telephone.   As  you. 
know,  Bill  Colby  is  the  former  director  of  the  CIA. 

Q     I  know . 

A     He's  somebody  that  I  knew.   He  frequently  calls 
me  and  others  •  And  told  me  that  he  was  talking  to  a  fellow 
from  --  he  was  talking  to  a  guy  who  had  a  project  in 
Trinidad  and  Tobago. 

Q     A  U.S.  person? 

A     Well,  I  don't  remember  what  he  said  at  that  time. 
As  I  recall  the  way  that  unfolded,  it  turned  out  that  this 
was  a  black  American  who  was  resident  in  the  United  States. 
He  lived  somewhere  in  Maryland.   I  didn't  basically  handle 
much  of  the  day-to-day  activities.   Somebody  else  in  my 
office  talked  with  him.   We  defined  the  project,  what  it  was 





that  Trinidad  and  Tobago  was  looking  for,  and  we  raised  that 
i|  with  Mr.  Hakim  to  see  if  he  could  find  the  radar  that  was 

Q     Are  there  any  documents  in  either  of  these 
exhibits,  6  and  7? 

A     I  don't  know.   I  think  that  probably  took  place 
before  1982. 

Q     All  right.  Who  is  the  black  American? 

A     I  don't  remember  the  guy's  name.   I  can  look  it 
up.   I'm  sure  we've  got  it  somewhere.   We  can  find  it. 

Q     He  was  doing  some  other  project  on  Trinidad  and 

A     Yes.   He  was  doing  something  else,  and  I  don't 
remember  what  his  business  was.   I  don't  know.   Maybe  I  met 
him  once.   Shook  hands  with  him,  and  as  I  said,  somebody  else 
in  the  office  handled  that  particular  project. 

Q     All  right.   Then  you  contacted  Hakim  about  it? 

A     Right . 

Q     Was  anybody  else  there  at  that  contact? 

A     No.   Not  that  I  recall. 

Q     Nobody  from  Hakim's  companies? 

A     There  was  a  fellow  that  we  corresponded  with 





in  Hakim's  company,  because  somebody  in  the  newspaper  business 
'  was  asking  me  names  of  various  people  that  I  know.   Did  I 


I  know  this  guy,  did  I  know  that  fellow?   And  I  didn't  even 
recognize  the  name,  but  I  finally  remembered  it  was  a  fellow 
by  the  nsime  —  I  think  his  name  is  Niedhart,  or  something 
like  that,  who  worked  for  Hakim. 
Q     In  California? 

A     Yes.   He  was  the  fellow  we  corresponded  with, 
maybe  we  talked  to  him  on  the  telephone  about  this  particular 

Q     Now  describe  the  project. 

What  was  it  that  they  wanted? 
A     They  wanted  a  radar   system,  something  for 
coastal  defense  kind  of  activity. 

Q     What  was  Hakim's  response  to  your  description  of 
what  was  needed? 

A     He  went  into  the  market  and  was  looking  for  a 
system,  and  I  think  he  found  a  system.   I  think  that  was 
conveyed  to  the  individual. 
Q     The  Marylander? 

A     Yes.   And  nothing  ever  happened. 
Q     Where  did  Hakim  find  the  system? 





A     I  have  no  idea. 

Q     Do  you  know  whether  he  accessed  any  CIA-related 
technical  people  in  order  to  discover  the  system? 

A     No,  I  don't  think  so.   My  memory  of  that  was, 
whoever  this  fellow  was  who  was  working  for  him  found  the 
system,  and  it  was  available  on  the  market,  but  how  he 
found  it,  where  he  found  it,  who  manufactured  it,  and  so 
forth,  I  don't  have  any  of  those  details  in  my  memory. 

Q     Okay.   You  say  this  is  sometime  prior  to  1982? 

A     Yes.   That's  my  recollection. 

Q     Can  you  give  me  a  better  read  than  that? 

A     No,  I  can't;  no. 

Q     Is  this  after  September  of,  what  is  it,  '79? 

A     It  has  to  be  after  September  of  '79,  after  I 
retired,  but  I  can't  put  that  into  any  — 

Q     Did  you  have  TGS  up  and  running  at  that  time? 
MR.  MC  KAY:   At  the  time  of  the  conversations 
about  Trinidad  and  Tobago? 

MR.  HOLMES:   Yes. 

THE  WITNESS:   I  don't  know.   I  probably  did, 
because  the  fellow  who  handled  that  has  worked  with  me 
primarily  in  TGS. 



4H /*  «  J**^  r' !*"1  79 



Q     Who  was  the  fellow?  ' 

A     A  fellow  by  the  name  of  Gillespie. 

Q     That's  Vernon  Gillespie,  the  person  who  his  name's 
in  the  record? 

A     Right. 

Q     Okay.   In  addition  to  the  radar  venture,  what  other 
relationships  with  Hakim? 

A     I  C2m't  think  of  any.   Iran-Iraq  War,  modular 
storage.   Korea.   You  know,  at  the  moment,  nothing  else  comes 
to  me.   I  mean,  what  I  have  since  '82  is  in  there,  but  I 
can't  think  of  anything  else,  you  know,  other  than  what's 
been  discussed  here. 

Q  Now  Hakim,  at  one  point,  formed  STTGI .  Have  you 
or  any  of  of  your  corporate  firms  or  people  associated  with 
those  corporations  dealt  with  STTGI? 

A     No.   I  think  —  no.   He's  talked  to  me  about  his 
concept.   That  came  into  being  —  that  idea  came  into  being 
after  there  was  some  law  passed  a  number  of  years  ago  about 
benefits  in  having  U.S.  trading  companies  or  conglomerates 
that  could  have  certain  benefits  of  being  able  to  put 
together  certain  packages.   So  I  heard  him  talk  about  that 





Q     Prior  to  the  STTGI ,  I  noticed  in  your  records, 
there's  a  company  that  he  '/as  dealing  as  called  Triangle. 

A     Right. 

Q     Who  was  Triangle? 

A     Let  me  go  back  to  try  to  answer  that.   My 
relationship  with  Hakim  sort  of  unfolded  like  this.   I 
dealt   with  Hakim  in  person,  and  in  some  of  the  early  days, 
when  I  was  doing  risk  analysis  work  for  him,  I  was  paid  by 
Hakim,  the  person,  later.   The  billings  were  sent  to 
Triangle.   He  asked  that  the  billings  be  sent  to  Triangle 
Associates,  and  we  were  paid  by  Triangle  Associates.   I 
don't  know  the  corporate  genealogy.   That  was  a  corporation 
that  he  was  involved  in.   Then  later  at  the  end  of  our 
relationship,  we  were  billing  to  Stanford  Technology. 

Q     Stanford  Technology  or  Stanford  Technology  Trading 
Group  International,  Inc.? 

A     No.   Stanford  Technology  Corporation,  STC. 

Q     California? 

A  Yes.  His  offices  were  in  California.  His 
residence,  I  think,  was  Los  Gatos ,  but  his  office  was 
somewhere  in  another  little  town  somewhere,  at  least  at  the 



a  A  81 


Q     So  it  was  the  California  STC,  not  to  be  confused 
with  STTGI? 

A     Yes . 

Q     All  right. 

There  came  a  time  when  Hakim,  as  we  now  know  from 
his  testimony,  was  involved  with  Iranians,  in  particular, 
a  man  named  Ghorbanifar.   You  had  had  contact  with 
Ghorbanifar,  in  the  meantime,  in  November  1984? 

A     Uh-huh. 

Q     I  notice  that  in  the  file,  you  had  a  memorandum 
to  the  file  detailing  your  meeting  with  Ghorbanifar  in  '84, 
and  although  you'll  probably  be  questioned  about  it  by  one 
of  the  other  lawyers  later,  and  I'll  skip  over  it  for 
that  reason  now,  I'm  just  drawing  your  attention  in  on 
Ghorbanifar  and  Hakim. 

From  the  time  that  you  meSj)L   Ghorbanifar  in  '84, 
did  you  talk  with  Ghorbanifar  about  Hakim  or  Secord  at  any 
time  after  that? 

A     No,  I  did  not.   I  had  no  meetings  with 
Ghorbanifar.   I  personally  only  met  him  the  one  time  in 
Hamburg.   So  I  met  him,  I  came  back  to  the  states,  turned 




in  my  report  to  the  State  Department,  and  X  never  met  with 
Ghorbanifar  after  that.   So  I  never  had  any  basis  for 
talking  to  him. 

As  a  matter  of  fact,  I  don't  ever  recall  even 
talking  to  him  after  that,  although  Razmara  had  a  slight 
difference  of  opinion  on  that.   He  says  that  one  time  he 
was  talking  on  the  phone  to  Ghorbanifar.   I  walked  into 
Mr.  Razmara 's  office,  and  he  said,  "Hey,  this  guy  is  on  the 
phone.   Why  don't  you  say  hello?"   So  I  said,  "Hello,  how 
are  you.   Goodbye." 

And  that  is  the  only  other  time  I've  talked  to  him. 
I  don't  even  remember  that,  but  Mr.  Razmara  says  that's 
what  happened,  and  1  have  no  reason  to  doubt  it. 

Q     From  that  time  period  —  just  put  the  time 
period  in  your  mind  from  the  end  of  1984  forward,  have  you 
had  any  contact  with  Hakim  or  Secord? 

A     Yes. 

Q     Let's  just  concentrate  on  Hakim.   I  shouldn't 
really  mention  Secord.   The  two  were  together  during  that 
period  of  time,  so  I  thought  maybe  that  would  help  key  your 
memory,  and  just  concentrate  on  Hakim. 

A     I  don't  remember  meeting  Hakim  until  —  I  don't 





have  any  memory  of  meeting  him  until  the  Miami  lawsuit 

Q     And  that  was  sometime  early  in  1985? 
A     No. 

MR.  MC  KAY:   May  of  '86. 

THE  WITNESS:   You  know,  you're  jumping  around  a 
lot  of  dates  here.   Let's  slow  down  for  a  minute  and  let  me 
get  this. 

Okay-   My  memory  of  the  lawsuit  is  May  of  1986. 

MR.  MC  KAY:   That's  correct. 

THE  WITNESS:   May  of  1986,  the  lawsuit  appeared. 
All  right.   After  that  — 

Q     When  the  lawsuit  appeared,  did  it  come  to  you  as 
a  bolt  from  the  blue,  when  the  complaint  was  filed,  or  had 
you  been  aware  that  something  was  brewing  prior  to  the 
complaint  being  filed? 

A     I  had  absolutely  no  idea,  nothing.   For  instance, 
my  first  knowledge  of  the  lawsuit  was,  one  of  my  associates 
picked  it  up  on  the  wire  service,  and  I  had  never  had  any 
conversations,  I  didn't  even  know  Avirglfan  or  Honey.   I 
never  heard  of  Danny  Sheehan,  never  heard  of  the  Christie 




Institute,  never  knew  that  there  was  a  law  case. 

Q     You  hadn't  heard  from  a  former  CIA  friend  or 
something  like  that,  that  the  Christie  Institute  was  looking 
into  the  contra  situation  or  anything  like  that? 

A     No .   I  maintain  very  few  contacts. 

Q     So  that  gives  us  a  fairly  specific  reference. 

A     I  don't  remember  any  conversations  between,  say, 
November  of  '84  and  that  period  with  Hakim,  meeting  with 
him  or  anything  else,  until  the  lawsuit  appeared.   That 
appeared  in  May  1986.   Sometime  shortly  after  that  I  had  a 
meeting  with  Hakim,  and  I  think  I  tracked  him  down  somewhere. 
He  was  in  Washington.   I  had  lunch  with  him.   I  talked  to 
him  about  the  lawsuit. 

Q     Was  anybody  else  there? 

A     No.   I  don't  recall  anybody  else  being  present. 

Q     What  was  said? 

THE  WITNESS:   Can  we  take  a  short  break? 
MR.  HOLMES:   As  a  matter  of  fact,  i'ts  12:15.   Do 
you  want  to  recess  now  for  lunch  and  come  back? 
MR.  MC  KAY:   That's  fine. 

(Whereupon,  at  12:15  p.m.,  the  taking  of  the 
deposition  was  recessed  to  reconvene  at  1:30  p.m.,  this  same 
day. ) 





(1:30  p.m.) 

resumed  the  stand  and,  having  been  previously  duly  sworn, 
was  examined  and  testified  further  as  follows: 
EXAMINATION  (Continued) 
Q     Mr.  Shac)cley,  as  I  recall,  when  we  broke  for 
lunch,  I  had  just  asked  you  what  the  content  of  the  meeting 
was  that  you  had  described  between  yourself  and  Mr.  Hakim 
in  approximately  May  1986. 

A     That  meeting  had  to  be  in  about  June  of  1986,  I 
told  you. 

Q     Sometime  shortly  after  the  filing  of  the  lawsuit 
by  the  Christie  Institute? 

A     The  Miami  lawsuit  came  out  in  May.   My  guess  is  it 
would  be  shortly  thereafter,  in  June  1986, 
Q     Good  enough . 

A     I  contacted  Mr.  Hakim,  had  lunch  with  him,  asked 
him  about  the  Miami  lawsuit,  what  do  you  know  about  it. 
Q     Was  Hakim  a  defendant  in  that  lawsuit? 





A  Yes.      He's   a   defendant.      Yes. 

Q     Was  he  a  defendant  at  that  time? 

A      Yes. 

Q     Has  there  been  a  growing  list  of  defendants? 

A     It  started  off  with  30.   It's  now  down  to  29. 

Q     In  any  event,  what  was  said  back  and  forth 
between  you  and  Mr.  Hakim? 

A     I,  basically,  asked  him  what  he  knew  about  the 
case,  because  it  was  a  mystery  to  me. 

Q     What  did  he  say? 

A     He  said  that  he  saw  no  understanding,  had  no 
understanding  of  why  I  was  in  the  case  and,  basically,  felt 
that  he  was  in  the  case  sort  of  by  guilt  by  association, 
because  he  knew  a  number  of  the  other  people. 

Q     Did  he  tell  you  anything  about  what  he  knew  about 
what  was  going  on  in  Central  America? 

A     No.   We  focused  exclusively  on  this  case,  and  he 
said  he  was  going  to  look  at  it,  and  that  was  it. 

Q     You  didn't  ask  him  if  there's  something  going 
on  in  Central  America  you  ought  to  know  about? 

A     No .   I  focused  exclusively  on  the  law  case,  you 
know,  who  are  these  guys?   What  do  you  know  about  the 





Christie  Institute?  What  do  you  know  about  Sheehan?  What 
do  you  know  about  Avirg<^n?  What  do  you  know  about  Honey? 

Q     He  said  he  didn't  know  anything? 

A     No.   He  said  he  didn't  know  any  of  those  people. 
I  asked, "What  do  you  know  about  Lipenko?"   "I 
don't  know." 

Q     And  to  your  recollection,  it  was  just  you  and 

A     Yes;  to  the  best  of  my  recollection,  that's  all 
there  was . 

Q     Did  you  memorialize  that  conversation? 

A     If  I  did  — 

MR.    MC   KAY:      I    think   it  was  memorialized.      I 
think   it    is   in   one   of   the  documents   that  was   described  as 
not  being  produced. 

TOE  WITOESS:     It's  in  our  sort  of  investigation  that  \«  did 
in  relationship  to  the   case. 
BY   MR.    HOLMES: 

Q  And  your   next   contact  with  Hakim,    relating   to 

Hakim?  ' 

A  I   don't   think   I've   seen  him.      We   had  a   conference 

call,    Mr.    McKay,    myself  and  his    lawyer  and  Mr.    Hakim. 





MR.  MC  KAY:   I  think  that  material  is  privileged. 

MR.  HOLMES:   I  have  no  problem  with  that. 

MR.  MC  KAY:   You  don't  need  to  answer  further, 
unless  you  want  to  say  — 

MR.  HOLMES:   Obviously,  it's  an  attorney-client 
privilege.   When  I  say  I  don't  have  a  problem,  I  mean  I 
don't  have  a  problem  with  you  not  answering. 

THE  WITNESS:   At  some  point  not  too  long  ago,  I 
was  in  the  office  fairly  early  in  the  morning.   The  phone 
was  ringing.   Nobody  was  around.   I  picked  it  up.   The  voice 
on  the  other  end  of  the  point  was  looking  for  Mr.  Razmara. 
I  said,  "He's  not  here.   Can  I  take   a  message."   And  it 
turned  out  to  be  Hakim.   He  said,  "What  are  you  doing 
answering  the  phones?"   And  I  said,  "Well,  I'm  the  first  one 
here,  answering  the  phones."   And  he  left  a  message  for 
Razmara.   You  know,  it  was  a  very  brief  telephone  exchange. 

Q     Okay.   I  want  to  ask  you  kind  of  a  general 

As  Hakim  has  testified,  there  were  efforts  made 
by  Hakim  and  others,  including  Secord  and  people  acting  for 
STTGI ,  to  establish  business  connections,  commercial 





relationships  in  Iran,  in  the  1985-86  period  of  time.   That's 
come  to  be  known  as  the  First  Channel  Ghorbanifar  and  the 
Second  Channel.   I  would  like  to  know  if  you  heard  or  know 
anything  about  those  efforts  by  Hakim  and  his  associates? 

A     No,  I  do  not.   I  know  nothing  about  them. 

Q     So  although  he  was  dealing  or  planning  to  deal 
in  commodities   that  ostensibly  or  presumably  would  have 
involved  countertrade,   you  and  your  associates  didn't  hear 
anything  about  that  happening? 

A     No.   The  only  other  conversation  I  had  with  him, - 
and  we  met  briefly,  was  on  Marwais. 

Q  Let's  go  back  into  Marwais  and  explain  that.  I 
gather  that  what  you  are  keying  on  there,  is  that  that  was 
a  countertrade  type  arrangement? 

A     Right. 

Q     Go  ahead  and  explain  that  arrangement. 

A     It's"very  simple.   Marwais  was  being  represented, 
as  far  as  I  know,  by  Hakim  and  Secord  in  the  UA£. 

Q     You're  dealings  with  Marwais  were  limited  only 
to  the  UAE? 

A     I  never  dealt  with  Marwais.   I  dealt  with 
Hakim  and  Secord. 





Q     And  were  your  dealings  with  Hakim  and  Secord  in 
reference  to  Marwais  limited  only  to  potential  Marwais 
business  in  the  UAE? 

A      In  the  UAE. 

Q     You  had  nothing  to  do,  for  example,  with  Marwais' 
i   opportunities  in  Saudi  Arabia  or  anyplace  else? 

A      No. 

Q     Go  ahead. 

A     That  was  it.  They  were  bidding  on  a  project  in 
the  UAE  aircraft  shelters.   One  of  the  possibilities  was 
the  UAE  would  pay  for  those  aircraft  shelters  in  an  oil 
barter  deal,  and  I  was  asked  about  the  oil  barter,  how  it 
worked,  how  it  could  work. 

Q     Who  asked  you  about  it? 

A     Hakim  and  Secord. 

Q     When  did  this  occur? 

A     I  can't  pin  that  down  with  precision,  but  I  think 

there's  a  file  in  here  somewhere. 

(A  pause.)  i 

Q     So  we're  looking  at  a  portion  of  Exhibit  No.  6   j 


that  consists  of  a  manila  file  folder  entitled  Marwais/UAE  J 

Oil  Barter  Folder,  Research  Associates  International.       i 




A     Okay.   It  shows  —  here's  a  memo  1  February  '85. 
I  talked  with  Mr.  Hakim  about  a  UAE  oil  barter 

Q     Did  you  reach  some  kind  of  agreement  with  Hakim? 

A     No.   1  didn't  reach  any  agreement.   We  just 
discussed,  back  and  forth,  what  if.   There  was  never  a  firm 
proposal.   In  other  words,  what  if  they  got  the  contract, 
what  if  oil  became  a  part  of  the  price? 

Q     What  was  the  understanding  between  you  and  he,  as 
to  what  would  happen,  if  they  did    get  the  contract? 

A     Could  I  help  him  structure  the  deal,  if  it  became 
a  firm  requirement,  that  is,  for  somebody  to  lift  the  oil 
to  generate  funds  by  lifting  the  oil.   And  I  said  yes. 
But  it  never  came  to  that.   They  never  got  the  contract. 

Q     Why  don't  you  explain  for  the  record  and  for 
the  people  who  may  read  this  someday,  in  the  dust  of  some 
archive,  what  a  countertrade,  oil  barter  deal  looks  like? 
MR.  MC  KAY:   Generically? 
MR.  HOLMES:   Generically,  just  so  it's 
understood.   I  think  I  understand  it,  and  obviously,  you 
do.   I'd  like  for  the  reader  to  understand  it. 

THE  WITNESS:   The  country  that  wants  to  have  a  | 
project  built,  in  this  case,  the  UAE,  signs  a  contract  with 

f~  ^ 




Builder  Marwais.   All  right.   Then  part  of  that  is  arranged 
with  the  UAE ,  whatever  entity  it  is  in  the  UAE  that's  doing 
this,  let's  say,  the  Ministry  of  Defense,  would  arrange  with 
the  Ministry  of  Petroleum  to  lift  a  certain  amount  of  oil. 
That  oil  would  go  to  an  oil  company,  and  that  oil  company 
would  then  take  and  sell  the  crude  and  then  deposit  those 
funds  into  an  escrow  account.   When  those  funds  were  in  the 
escrow  account,  then  the  bank  would  pay  those  funds  to  the 
supplier  of  the   services,  in  this  case,  Marwais,  on 
instruction  from  the  country,  the  UAE  Ministry  of  Defense. 

Q     And  is  the  oil  company  obliged  to  perform  at  a 
certain  price,  whether  or  not  the  Marwais  contract  is  done, 
or  is  it  contingent  on  Marwais  completing  the  contract? 

A     It  depends  on  how  the  deal  is  structured. 

Q     So  it  may  be  that  way  and  it  may  not  be? 

A     Normadly,  it  would  be,  the  Ministry  would  sell  the 

crude  to  the  oil  company.   The  oil  company  would  sell  that 

crude  for  a  fee,  depending  on  how  they  negotiated.   Let's 

say  their  fee  was  something  like  15  cents  a  barrel.   All 

right,  the  oil  company  would  take  that  15  cents  a  barrel  as 

their  profit  for  that  transaction.   The  remaining  funds  would 

be  put  into  the  escrow  account.   At  that  point  in  time,  that 





portion  of  the  deal  between  the  Ministry  of  Petroleum  and  the 
oil  company  is  finished.   Then  that  escrow  account  is 
controlled  by  the  Ministry  of  Defense  in  the  UAE,  which 
then  issues  progress  payments,  depending  on  the  level  of 
construction,  to  whoever  is  doing  the  construction.   In 
this  case,  Marwais. 

So  it  is  put  together  in  that  manner,  but  they're 
really  separate  transactions  which  come  together  to  make  a 
total  deal. 

This  financial  arrangement  is  a  very  common 
arrangement  in  Third  World  countries,  isn't  it? 

A     It  has  been  a  very  popular  arrangement  in  the 
market,  probably  over  the  last  four  to  five  years. 

MR.  MC  KAY:   Mr.  Holmes,  could  we  identify  this 
person  who's  just  come  in  from  the  House? 

MR.  HOLMES:   Yes.   This  is  Joe  Saba  from  the 

Q     When  we  did  the  chronology  of  Hakim  up  to  the 
June  of  1986  meeting  and  beyond,  we  didn't  touch  on  this. 
A     We  touched  on  it,  then  we  got  off  on  something 




Q     Is  there  anything  else  we  didn't  touch  on?   Any 
other  relationship  with  Hakim  that  we  didn't  touch  on,  when 
we  gave  that  chronology? 

A     I  don't  think  so.   To  the  best  of  my  knowledge, 
we  touched  on  this,  and  you  said,  no,  you  want  to  discuss  it 
later,  and  then  we  got  off  on  something  else. 

Q     Now  returning  to  the  model  or  the  phenomena  of 
countertrade,  this  phenomena  would  also  apply  as  a  general 
phenomena  i'-  Iran,  as  well? 

A     It  could, 

Q      In  particular,  as  Iran  buys  high  tech  items  or 
munitions  or  missiles  or  whatever,  it  is  oil  that  they  are 
selling,  in  order  to  raise  those  funds? 

A     Yes.   In  the  Iranian  economy,  oil  is  the  largest 
producer  of  income. 

Q     And  your  job,  over  the  past  five  or  six  years 
anyway,  has  been  keeping  your  thumb  on  the  oil  business  in 
the  Middle  East,  of  course,  including  Iran,  where  Mr.  Razmara 
is  from? 

A     Uh-huh. 

MR.  MC  KAY:   I'm  going  to  object  to  the  question 
as  vague,  in  terms  of  keeping  your  finger  on  the  oil  business 




I  don't  know  whay  that  means. 

j|  MR.  HOLMES:   If  you  don't  understand  the  question, 


let  me  know. 

THE  WITNESS:   There  are  22  oil-producing  countries 

in  the  world.   Okay.   I  monitor  trends  relative  to  those  22 

oil-producing  countries,  and  there  are  a  couple  of  more 

countries  that  are  coming  on  stream  now. 


Q     We  know  from  the  testimony  in  the  hearings  that 
were  some  sizable  Iranian  purchases  going  on  in  1985  and 
1986  for  weapons,  some  at  least,  involving  the  United  States 
and  others  involving  other  countries. 

Did  you  gather  information  about  the  oil 
countertrade  in  relation  to  those  kinds  of  purchases  in  your 

A     No.   Tha*-  cas  not  a  particular  requirement,  you 
know.   I  looked  at  the  countertrade  and  the  opportunities 
rather  than  collecting  information  numerically  about 

Q     Wouldn't  an  Iranian  decision  to  buy  a  substantial 
amout  of  arms  requiring  cash  payments  be  something  that 
would  cause  a  blip  in  their  oil  trading  posture? 





I       A     It  might,  but  that's  not  the  way  you  monitor 


j   Iranian  oil  production,  is  by  backing  into  it  through 

j   whatever  sales  or  buys  they  might  be  making.   In  other 


words,  you  monitor  Iranian  oil  production  on  the  basis  of 

output.   You  know,  tanker  liftings,  and  so  forth. 

Q     In  any  event,  did  you  hear  from  any  source, 
about  Iranian  desires  to  buy  missiles  in  1985  or  1986? 

A     I  think  the  general  conversation,  you  know,  that 
the  Iranians  were  interested  in  buying  all  kinds  of 
equipment,  including  missiles,  I  wasn't  specifically 
involved  in  any  such  action. 

Q     Well,  I'm  not  suggesting  that  you  were.   I  just 
wanted  to  know  what  the  sources  were  out  there. 

A     Well,  it's  in  the  newspapers.   I  mean,  this  kind 
of  stuff  is  in  the  newspapers. 

Q     Did  you  have  anything  more  direct  than  newspaper 
reports  on  that  subject  during  that  period  of  time? 

A     No.   There's  a  file  in  here  where  I  tried  to 
arrange  a  processing  agreement  between  ^V   client  and 
Portugal,  in  which  Portugal  would  buy  Iranian  crude. 

Q     Could  you  explain  that?   I'm  sorry.  You  lost  me 
on  the  processing  arrangement. 







A     Okay.    A  processing  agreement,  you  have  to  have 
a  refinery.   In  this  case,  Portugal  has  a  refinery. 
Portugal  also  buys  crude  for  its  own  account.   Portugal  buys 
from  Iran.   It  is  not  unusual  in  the  oil  business  for  someone 
to  make  a  processing  agreement.   They,  in  effect,  will  buy 
barrels  of  product  that  come  out  of  that  refinery,  not  the 
crude,  the  product.   In  other  words,  here  — • 

MR.  MC  KAY:   I  think  we  understand. 

Q     So  your  client,  in  this  situation  is  not   using 
its  own  refinery  in  the  United  States.   He's  buying  the 
product  of  a  Portuguese  refinery? 

A     Right. 

Q     And  it  is  the  Portuguese  who  are  doing  the 

A     The  Portuguese  are  doing  the  processing,  for 
which  they  get  a  fee. 


Q  So   it's   certainly   logical   to   assume   that   what 

we're    looking   at   is   very  much   like   this   Marwais,    United 


W  •-  :•     ..  ?:.,?. ^ 



Arab  Emirates  deal,  in  which  the  oil  being  processed  in 
Portugal  is  countertrade]! 

A     It's  not  a  countertrade  deal.   It's  an  entirely 
different  kind  of  a  deal. 

Q     Well,  it's  a  payment  deal. 

A     No.   Iran  produces  crude.   Iran  sells  crude  to 
the  Portuguese.   The  Portuguese  had  a  fixed  period  of  time 
within  which  to  pay  for  that  crude. 

All  right,  let's  just  arbitrarily,  because  it 
has  to  be  negotiated,  let's  say  it's  45  days.   In  that  45- 
day  period  that  Portuguese  refinery  takes  that  and  turns 
that  into  whatever  it's  supposed  to  turn  that  into  --  diesel, 
motor  fuel,  whatever,  and  it  sells  that  to  somebody  who 
then  sells  it  into  a  European  distribution  mechanism.   So 
you've  got  cash  flowing  throughout  this  whole  mechanism. 

Now  what  the  Iranians  get  paid  for  or  what  the 
funds  that  the  Iranians  get  paid  for  their  oil,  they  do  with 
that  whatever  they  want.   It's  not  linked  to  anything 

•ct-notiM.  nnmn.  >nc 


Q     Did  you  ever  discuss  with  Hakim  or  anybody 
associated  with  Hakim  any  opportunity  relating  to  medical 

A     No,  I  have  no  recollection  of  ever   talking  to 
Hakim  about  medical  supplies. 

Q     Have  you  ever  had  any  discussions  relating  to 
medical  supplies  being  sold  to  Iran? 

A     No.   I  don't  recall  medical  supplies. 

Q     Not  necessarily  associated  with  Hakim,  you 

A     No.   I  have  no  recollection  of  any  medical 
supplies  being  discussed  with  me,  selling  them  to  Iran. 

Q     Have  you  or  anybody  associated  with  the  companies 
that  you've  been  associated  with  dealt  in  medical  supplies? 

A     Yes.   We  have  recently  been  talking  with  Kuwait 
on  medical  supplies.  We've  been  talking  with  a  company, 
an  American  company  here  in  Roslyn   in  the  last  couple 
months  on  medical  supplies  for  the  Saudi  market. 

Q     But  to  your  knowledge,  none  of  those  medical     ' 





supplies  are  destined  to  go  to  Iran  by  any  trade  arrangement? 

A     Not  that  I  know  of. 


||       Q     And  nobody  associated  with  Hakim  in  any  way  has 


I   spoken  to  you  or  anybody  associated  with  the  companies  that 

|!   you're  associated  with  about  trade  opportunities  in  Iran 

in  1985  or  1986? 

A     I  recall  no  conversations  on   trade  activities 
in  Iran. 

Q     Were  you  surprised  to  hear  that  Hakim  was 
involved  in  developing  trade  activities  into  Iran? 

A     Yes. 

Q     When  did  you  first  become  aware  of  it? 

A     Whenever  it  appeared  on  television. 

Q     No  prior  inkling?   No  discussion  with  anybody 
about  it? 

A     I  don't  have  any  recollection  of  that. 

Q     Let  me  broaden  my  previous  question. 

You  and  he  have  mutual  acquaintances.   You  and 

Secord  have  mutual  acquaintances.   You  and  a  number  of      ; 

other  people  who  are  likely  to  be  in  the  know  on  the 

Iranian  deals  have  mutual  acquaintances  like,  for  example,   ' 

North  or  other  people  in  the  government.   None  of  those     ■ 






mutual  acquaintances  alerted  you  to  the  existence  of  the 
so-called  "Iranian  Initiative"  up  until  the  time  it  was 
publicly  disclosed  on  television? 

A     I  have  no  kqnowledge  of  that,  and  I  don't  see 
any  reason  why  I  would  have  any. 

Q     Well,  as  a  ''(^bresentative  of  an  Iranian- 
specializing  oil  trader,  it  would  certainly  seem  like  a 

MR.  MC  KAY:  Who  says  he's  an  Iranian-  .' 

specializing  oil  trader? 

MR.  HOLMES:   Mr.  Shackley  has  said  he 
specializes  in  the  Near  East  and  Razraara's  from  Iran; 
his  ma^or  client,  John  Dois,  is  the  oil  trader. 

MR.  MC  KAY:   I  don't  understand  where  the 
Iranian  specialization  comes.   I  think  that's  not  in 
anything  he's  testified  to.   He's  testified  on  all  22 

MR.  HOLMES:   No,  no.   He  asked  me,  inferentially , 
why  I  was  asking  the  question,  that's  all. 

MR.  MC  KAY:   Are  you  referring  to  Razmara  then?  j 

MR.  HOLMES:   No ,  no . 

MR.  MC  KAY:   I  thought  you  said  a  person 





specializing  in  the  Iranian  oil  trade. 

MR.  HOLMES:   Oh,  no.   Okay.   No,  I  didn't  mean 

THE  WITNESS:   I  don't  specialize  in  the  Iranian 
oil  trade. 

MR.  MC  KAY:   Maybe  he  didn't  say  that. 

THE  WITNESS:   Well,  that's  what  I  thought  — 
that's  what  I  thought  you  said. 

MR.  HOLMES:   Okay.   I  didn't  mean  it  that  way. 

THE  WITNESS:   I  don't  specialize  —  in  other 
words,  I  monitor  the  oil  trade  per  se,  and  the  22  oil- 
producing  countries  within  those,  probably  the  13  countries 
in  OPEC. 

Q     Wouldn't  it  be  logical,  knowing  the  Middle 
Eastern  market  and  particularly  its  petroleum  component  as 
you  do,  to  assume  that  Hakim's  group  would  have  been  in 
touch  with  some  countertrader,  in  order  to  provide  the 
other  side  of  their  trade  opportunities  in  Iran,  in  other 
words,  to  generate  the  cash  that  the  Iranians  would  need 
to  buy  missiles  and  medical  supplies  and  whatever  else  it 
was  that  Hakim  was  hoping  to  sell  in  Iran? 





A     NO,  I  don't  think  that  necessarily  follows.   I 
mean,  the  Iranians  have  been  in  the  oil  market  for  a  long 
time,  and  they've  got  a  lot  of  people  scattered  all  over 
Europe  who  can  put  these  deals  together  for  them.   They're 
constantly  out  there  marketing  various  and  sundry  things. 
If  what  you're  trying  to  say  is  that  there's  got  to  be  this 
big  mechanism  that  comes  down  this  way  toward  a  Hakim  oi 
somebody  like  him,  and  you're  on  the  wrong  wicket  — 

Q     I'm  not  sure  I  understood,  what  you  mean  — 

a  big  mechanism. 

A  In  other  words,  if  you  take  the  total  National 
Iranian  Oil  Company,  which  is  a  large  structure,  and  they 
have  representatives  in  a  lot  of  countries  --  for  instance, 
they  have  an  office  in  London  that  markets  -  so  these  guys 
are  out  marketing,  and  they  have  an  established  mechanism 
for  marketing.  They  are  selling  crude  to  the  same  people 
they've  been  selling  crude  to  for  years. 

Q     Of  course,  the  same  could  be  said  about  the 
United  Arab  Emirates,  couldn't  it? 

A  NO.  Not  really,  because  the  UAE  production  has  | 
increased  in  recent  years.  They've  got  more  crude  to  deal  • 
with  than  they  have  had  in  the  past,  so  they're  looking  for 






new  customers. 

If  you  look,  historically,  at  Iranian  production, 
it's  come  down. 

Q     So  although  it  would  be  reasonable  to  assume  they 
might  have,  it's  certainly  not  necessary  that  they  would 
have.   That's  the  point  you're  making? 

A     Yes.   I'm  making  the  point  that  they've  got  a 
big  marketing  mechanism,  and  if  you're  looking  at  there's 
got  to  be  sort  of  one  guy,  then  I'm  saying  that  I  think 
you're  off  on  the  wrong  wicket,   that  there  is  no  one 
instrumentality  that  handles  their  large  marketing. 

Q     I  understand  what  you're  saying. 

Let's  return  to  Mr.  Secord,  the  second 
principal,  and  start  as  we  did  with  Hakim  at  the  beginning 
and  go  forward  in  time. 

When  did  you  first  know  or  know  of  Mr .  Secord? 

A     I  first  met  Secord  in  Laos,  when  we  were  both 
in  the  government. 

Q     The  time  frame? 

A     I  was  in  Laos  in  '66  to  '68.  \ 

Q     Was  he  there  the  entire  time  you  were  there? 

A     I  have  no  way  of  reconstructing  that.   He  and  I 






worked  together  -n  Laos.   That's  all  I  can  tell  you 

Q     All  right.   Where,  after  Laos,  did  you  have  any 
contact  with  Secord? 

E-FCMII/U.  •EI>a*rE«S.    INC 





A     I  don't  know.   Maybe  when  I'd  come  back.  When 
I'd  come  back  from  overseas,  if  he  were  here  in  the  country, 
at  large  parties,  a  get-together,  he'd  be  at  some  of  these 
parties.   But  I  don't  have  any  specific  date.   I  mean,  I 
can't  say,  tell  me  that  you  met  him  on  the  tenth,  of  whatever, 
I  just  mean  generically. 

Q     For  a  period  of  years,  you  had  no  professional 
contact  with  them  then? 

A      NO. 

Q     When  was  the  first  business  or,  hopefully,  business 
contact  you  had  with  Secord? 

A     I  saw  him  after  he  retired,  and  m.  don't  know  when 
he  retired. 

Q     Let's  assume  he  retired  in  May  of  1983. 

A     Then  somewhere  in  that  period,  shortly  after  he 
retired,  I  started  talking  with  him  about  business.  And  the 
only  specific  things  that  I  remember  discussing  with  him  in 
the  business  sense,  is  the  Marwais  activity  that  he  was 

involved  in  in  the  UAE.   I  think  on  one  occasion  he  talked 


to  me  about  some  possibility  of  an  oil  concession  or        ; 
something  in  the  Sudan. 

Q     The  Marwais  thing  was  the  same  opportunity  that   ■ 

te-fiDfUL  atPoiiTiaj.  inc 





we've  talked  about  with  Hakim? 

A     Right. 

Q     What  was  the  oil  concession  in  Sudan  about?   Tell 
me  about  that. 

A     There's  not  much  to  tell.   He  was  aware  of  the 
fact  that  there  was  a  concession  there  and  raised  this  with 
me,  because  he  felt  that  he  had  some  ability  to  help  open 
a  dialogue  on  that  particular  concession. 

Q     I'm  not  even  really  understanding  what  you  mean 
by  an  "oil  concession  available."   You  mean  the  government 
of  Sudan  is  holding  itself  out  as  available  to  grant  some 
kind  of  a  lease  for  developing  oil  reserves? 

A     There  are  all  sorts  of  combinations.   I  mean,  I 
don't  think  I'm  here  to  give  you  an  education  in  the  oil 
business  today,  but  in  its  simplest  terms,  somebody  may  have 
a  block  of  land  that  there  are  geological  findings  that 
indicate  that  it  has  oil.   It's  a  question  of,  can  you  bid 
on  it.   How  do  you  qualify  for  bidding? 

Q     Did  you  take  this  opportunity  and  discuss  it 
with  anybody  else  other  than  Secord?  ' 

A     No,  I  didn't  do  anything  with  it. 

Q     You  never  even  talked  it  over  with  any  person  in  . 





the  oil  industry  and  asked  them  if  they  might  be  interested? 

A     No,  because  my  view  of  the  Sudan  was  that  it  was 
a  basket  case.   It  was  not  any  kind  of  a  place  that  I  would 
want  to  recommend  to  any  clients.   There  already  had  been  a 
large  number  —  a  lot  of  reasons  for  it  —  a  number  of 
incidents  in  the  Sudan  that  didn't  make  it  worthwhile. 

Q     What  was  Secord's  hope  for  his  own  role  in  that 
oil  concession? 

A     We  never  discussed  it.   He  said,  "Look,  here's 
something  I'm  aware  of  in  the  Sudan.   Why  don't  you  take  a 
look  at  it?"  I  looked  at  whatever  it  was.   I  didn't  do 
anything  with  it.   That's  as  far  as  it  went. 

Q     All  right.   This  was  approximately  when? 

A     After  he  retired,  and  we  were  talking  about  the 
Marwais  activity,  somewhere  in  that  period. 

Somewhere  before  Marwais  and  after  his  retirement? 

Would  you  repeat  that? 

Was  it  before  the  Marwais  discussions  or 




A     It  was  probably  after  the  Marwais  or  at  the  same  j 
time  as  the  Marwais  discussions. 

Q     Okay.   From  that  time  forward,  when  was  your  next 

E-rCDCiuu.  acPOtTCiis   mc 





contact  with  Secord? 

A     I  don't  have  any  real  memory  of  any  contacts 
with  him,  until  I  went  in  the  hospital, 

I  remember  he  stopped  by  to  see  me  at  the 
hospital.   That's  the  next  time  I  remember  seeing  him. 

Q     Are  you  talking  about  late  in  1986,  then? 

A     I  was  in  the  hospital  in  October  of  1986. 

Q     Was  there  anybody  else  there  when  you  dropped 

A  I  had  just  had  a  major  operation.  All  I  remembet 
is  various  people  ccming  in.  I  don't  remember  who  was  there 
and  who  wasn't  there. 

Q     So  the  conversation  you  had  with  him  then  was 
more  or  less  moral  support,  hope  you  get  better  soon. 


Are  you  alive. 

He  didn't  come  there  with  a  big  proposal,  sign 


Did  he  have  any  proposal  at  all? 

All  I  remember  is  talking  to  the  guy.   That's 
all  I  remember.   I  mean,  I  know  he  was  one  of  several, 
many  people  who  came  to  see  me  while  I  was  in  the  hospital. 





Q     After  that,  when  was  your  next  contact? 

A     My  next  contact  with  him  was  after  the  Miami 
lawsuit.   The  Miami  lawsuit  was  before  that.   June,  May. 
Let's  back  up.   Back  up.   I  stand  corrected. 

I  saw  him  when  the  Miami  lawsuit  came  out.  I  had 
a  conversation  with  him  in  June  of  '86.   I  went  in  the 
hospital  in  October  of  '86. 

Q     All  right.   Now  — 

A     I'm  getting  mixed  up  on  these  dates  and  this 
jumping  around  here  from  the  1960s  to  1980. 

Q     I  thought  we  had  done  a  remarkable  job  in 
covering  the  ground  on  this  one. 

All  right.   It's  June  of  1986.   You've  been 
served  with  the  Avirfanwi  and  Honey  lawsuit.   You  met  with 

A     Yes,  I  did. 

Q     Was  anyone  else  present? 

A     I  don't  think  so.   I  don't  recall  anyone  else 
being  present. 

Q     Was  there  only  the  one  meeting?  j 

A     No.   I  had  a  meeting  with  him,  and  let's  see,  I  ' 
think  you  were  out  of  town.   It  was  shortly  thereafter  that; 






I  met  with  him  and  his  attorney.   That  is,  I  met  with 
Secord  and  Secord's  attorney. 

Q     Who  is  his  attorney? 

A     It's  Mr.  Green. 

Q     Guys  can  have  more  than  one  attorney. 

In  your  first  meeting  with  him,  what  was  said 
between  the  two  of  you? 

A     It  was  the  same  kind  of  conversation  that  I  had 
with  everybody  at  that  time,  you  know,  what  do  you  know? 
Q     Who  did  you  talk  to  about  the  lawsuit  in  that 
period  of  time? 

A     Let's  see.   I  talked  to  Secord,  Hakim,  Singlaub. 
On  the  telephone,  I  talked  to  Andy  Messing.   I  don't  know. 
There  may  be  somebody  else.   Those  are  the  ones  that  stick 
out  in  my  mind  at  this  particular  point  in  time. 

Q     You  were  trying  to  find  out  what  was  going  on. 
A     Yes.   I  was  trying  to  find  out,  you  know,  what 
this  consisted  of. 

Q     What  did  Secord  say? 


A     Secord  told  me  that  he  knew  some  of  the  people 
in  that  suit,  that  he  was  going  to  be  discussing  it  with    • 
his  attorney.   He'd  just  found  out  about  this  case,  shortly' 






prior  to  niy  having  learned  about  it,  and  why  don't  I  come 
over  and  sit  in  on  that  meeting.   I  had  the  impression  from 
that  that  he  knew  some  of  these  players  that  had  been 
involved  in  Central  America,  but  I  didn't  know  the  nature 
of  his  involvement. 

Q     Did  he  come  to  tell  you  the  general  nature  of 
his  involvement? 

A     No,  he  didn't. 

Q     Did  he  tell  you  that  he  was  withdrawing  from  his" 
direct  involvement  in  the  contra  resupply? 

A     No,  I  didn't  get  into  that  with  him. 

Q     Did  he  say  anything  about  contra  resupply? 

A     No,  he  didn't  say  anything  specific.   He  said  he 
knew  some  of  those  people  that  were  on  that  particular  list. 


Of  course,  you  knew  some  of  the  people  on  the 

Very  few. 

You  knew  Quintero  and  Chavez,  Clines,  Secord, 



A     Yes.   Those. 

But  I  didn't  know  and  still  don't  know  people 
like  Hull,  for  instance.   Owen.   The  first  time  I  saw  him. 

inouM.  uro'.ttn.  inc 





I  thought  maybe  this  was  the  fellow  who  used  to  work  in  the 
Agency,  but  it  isn't. 

I  established  who  he  was,  and  there  are  a  lot  of 
people  on  that  list  that  I  don't  know. 

Q     What  I'm  getting  at  is  the  fact  that  he  knew  some 
of  these  people  was  perfectly  obvious  to  you  at  the  time. 
He  didn't  have  to  tell  you  that.   You  know  that  he  knew 
those  people . 

A     But  there's  a  big  difference  between  knowing 
people  like,  let's  say,  Singlaub,  whom  we  knew  in  the  military 
service,  as  opposed  to  being  involved  in  a  lawsuit  with  all 
these  guys.   What  are  these  guys  doing  in  this  lawsuit? 

Q     That's  exactly  what  my  question  is. 

A     What  do  you  know  about  the  Christie  Institute? 

Q     He  must  have  told  you  a  lot  more  than  "I  know 
some  of  those  people." 

What  did  he  tell  you  eOxsut  what  the  facts  were? 

A     No.   He  simply  told  me  that  he  knew  a  number  of 
th««e  people,  that  he  'a  been  active  in  Central  America. 
He  was  going  to  be  discussing  this  with  his  particular     • 
lawyer,  and  Mr.  McKay  was  out  of  town  at  that  particular    ■ 
point  in  time.   This  was,  I  think,  in  June.   I  was  very 






agitated  by  this  particular  suit,  and  I  decided  I'd  go  to 
that  particular  meeting,  and  I  did. 

Q     Did  you  memorialize  your  conversation,  your  first 
conversation  with  Secord  and  your  later  conversations  with 

A     Yes.   I  think  those  are  covered. 
Q     What  other  memoranda  are  covered  in  the  letter 
with  regard  to  the  Avirg^n  lawsuit?   Just  so  we'll  have  a 
catalog  of  what's  not  being  produced  for  that  reason. 

MR.  MC  KAY:   I ' 11  be  glad  to  give  you  a  list 
by  separate  mailing  and  go  into  it  more  completely.   I  could 
have  done  that  and  probably  should  have  done  that.   I  can  do 
it  very  easily  by  getting  the  names. 

MR.  HOLMES:   Can  we  agree  to  have  that  on  Monday? 
MR.  MC  KAY:   Yes. 
Q     All  right.   Did  those  discussions  about  the 
lawsuit  continue,  or  were  those  the  only  two? 

A     Those,  basically,  were  the  only  two.   Recently, 
I've  had  a  meeting  with  him  and  his  lawyer,  Mr.  McKay  and 

MR.  MC  KAY:   About  the  lawsuit. 







Q     Other  than  the  lawsuit,  have  you  had  any  contact 
with  Secord  or  discussions  with  Secord  in  1985  or  1986, 
except  for,  I  guess,  the  Marwais  and  the  Sudan  thing  were 
before  that. 

So  without  further  exception,  any  other 
conversations  with  Secord  in  '85  of  '86? 

A     The  only  things  that  I  recall  over  the  last 
couple  of  years,  and  I  can't  pin  it  down  with  precision, 
the  only  business  that  I  recall  talking  with  him  about  is 

Marwais  and  the  Sudan.   And  the  next  thing  that  is  in  my 

memory  bank  relative  to   Secord  is  the  Christie  institute 


Q     Did  you  or  anybody  associated  with  the  companies 
that  you're  involved  with,  like  PGS  or  RAI ,  receive  any 
inquiries  from  Secord  or  relating  to  Secord  about  the 
possible  support  for  any  military  activity  in  Central 

A     No. 

Q     No  requests  for,  say,  a  list  of  names  of  people  ' 
involved  in  security?  People  involved  in  air  supply, 
air  transport?  Nothing  like  that? 

■TEOOM.  MratTOJ.   INC 




A     NO. 

Q     I  want  to  go  back  and  start  with  Mr.  Clines, 
the  same  process. 

You  met  Mr.  Clines,  as  I  recall,  in  connection 
with  Miami? 

A     No.   I  think  I  met  Mr.  Clines  ^^^^^^■■xn  the 
'50s.   I  just  have  a  vague  recollection. 

Q     Is  this  in  relation  to  the  CIA? 
A     Yes.   Then  my  next  memory  of  him  is| 
was  there  when  I  arrived. 

my  memory  is  that  he  was  still  there. 

'EM«>i.  ncraarcus   inc 




A     To  the  best  of  my  recollection,  because  he  was 
there  when  I  arrived,  he  was  there  when  I  left. 

Q      Would  it  fair  to  say  that  you  became  friends 
during  those  years? 

A     Yes.   You  know,  I  had  a  lot  to  do  with  him,  and 
we  all  had  an  esprit  de  corps  comradeship,  and  so  forth. 

Q     So  from  that  point  forward,  you  would  have  one 
branch  of  your  relationship  with  Clines  as  a  general 
friendship  contact  throughout  those  years,  social  meetings 
and  that  sort  of  thing? 

A     Yes;  right. 

Q     When  was   your  next  contact  with  Clines, 
'And  I  mean  to  exclude  now  the  totally  innocuous 
type  of  social  contact,  in  order  to  concentrate  on  business 

type  contacts. 







A     My  next  memory  is  that  he  appeared  m  Laos, 
probably  in  '67,  but  I  can't  be  more  specific  than  that. 

Q     His  duties  in  Laos  brought  him  together  with 

Secord  as  well? 

A     I'm  sorry.   You'll  have  to  repeat  that. 

Q     His  duties  in  Laos  brought  him  together  with 

Secord  as  well  as  yourself? 

Q     How  long  were  you  and  he  there  together? 

A     I  can  tell  you  when  I  was  there.   I  arrived  in 
'66,  and  I  left  in  late  '68.   I  don't  know  when  he  came. 
As  I  say,  he  may  have  come  in  '67,  and  he  was  still  there 
when  I  left. 

Q     All  right. 

And  your  next  contact  with  him? 

A     My  next  contact  with  him,  I  think,  is  probably 
about,  probably  '73,  maybe  late  '72.   '72,  '73. 

Q     What  did  that  consist  of? 





A     That  consisted  of  his  coming  to  a  Washington 
to      with^^^^^^^^^^^^^HH^s 
leaving]HH||H|H^^^^^^H|^s  ^^  ^^^ 

from  somewhere  like  the  Naval  War  College  or  something. 
What  phase  of  H^^^^^^^^^^^^^H  was 
A     What  do  you  mean,  "what  phase"? 

Was  ^^^^^^^^^^^^^^^^^H  ^ 
A     Yes.   It's  the  geographical  entity  that's 

responsible  ^°^^^|^H^^^^IH 

Q     So  it  was  like  a  bureau  or  division: 

A     A  division;  yes. 

Q     And  he  was  taking  over  for  who?  He  was  taking  the 
job  that  you  were  leaving? 

A     No.   I  was  leaving  as  the  head  of  that  unit.   I 
think  he  was  coming  in  to  be  about  at  some  job  four  or  five 
echelons  below  that.   I  don't  know  what  job  he  had  there, 
but  I  remember  I  was  going  out  as  he  was  coming  in. 

Q     For  a  brief  while  he  was  working  for  you  then? 

A     Maybe  very  briefly.   If  he  did,  it  was  very  brief. 

Q     Go  ahead.   What  was  your  next  contact? 

A     From  that  point  on,  we  were  both  —  let's  see. 
Whatever  that  was,  it  was  '73.   From  that  point  on,  we  were  • 

-fcoeiAi.  acPOiTtas.  rNC 





both  in  the  Washington  area. 

Q     Yes.   Do  you  mean  by  that  that  you  had  fairly 
regular  social  contact  with  him? 

A     I  would  see  him  occasionally  for  lunch,  and  so 

Q     Did  you  ever  have  any  financial  transactions 
with  Mr.  Clines? 

A     Yes .   At  one  time  we  owned  a  rental  piece  of 
property  in  McLean  together. 

Q     When  was  that? 

A     I  can't  reconstruct  those  dates.   Probably  in  the 
'70s  sometime,  the  late  '70s. 

Q     Is  that  the  only  financial  relationship  you've 
ever  had  with  Clines? 

A     Yes. 

Q     Will  you  describe  the  rental  property? 

A     What  is  there  to  say?   It's  a  rental  property. 
We  bought  a  piece  of  property.   We  rented  it  out.   Eventually, 
we  had  to  pay  it  off,  and  when  it  came  time  to  refinance  it, 
he  bought  me  out. 

Q     You  bought  the  property  together?   You  each  put 
in  some  money  on  it? 






A     I  think  the  transaction  was  Clines  and  my  wife. 
At  that  time,  I  was  trying  to  create  some  investment  properties 
that  my  wife  could  manage,  and  so  forth,  but  I  never  got  very 
far  with  it. 

Q     Clines,  at  this  point  in  time,  was  dealing  in 
real  estate  while  he  was  at  the  CIA,  with  the  knowledge  of  the 
CIA;  is  that  right? 

A     Right. 

Q     Where  did  the  money  come  from  that  you  and  he     J 

A     I  don't  know  where  his  money  came  from.  My  money 
came  from  savings  that  I'd  accumulated. 

Q     How  much  was  it? 

A     I  don't  remember.   I'd  have  to  go  back  and 
reconstruct  it.   I  don't  remember. 

Q     You  bought  the  property  and  then  made  payments? 

A     Yes. 

Q     And  it  was  a  situation  where  the  rent  paid  for 
the  payments  and  a  little  bit  more?   Is  that  the  type  of 

A     Well,  it  either  broke  even,  or  it  was  a  slight 
negative  cash  flow,  $50  or  $75,  or  whatever  it  was. 





Q     Would  it  be  made  up  on  your  depreciation? 

A     Right. 

Q     Then  you  say  you  paid  it  off.   By  that,  you  mean 
that  you  completed  your  mortgage  payments? 

A     No.   There  was  a  period  of  time  that  we  were 
paying  mortgage  payments .  The  people  who  owned  the  property 
moved  and  bought  another  property.   At  the  end  of  a  fixed 
years  period  of  time,  whatever  it  was,  a  couple  of  years,  we 
did  have  to  refinance  it  or  pay  it  off.   So  we  had  to  pay 
them  off. 

In  order  to  do  that,  Clines  bought  me  out.   Then 
he  refinanced  the  thing.   He  bought  me  out  of  my  share  of 
what  we  assumed  the  property  was  worth. 

Q     Do  you  know  where  he  obtained  the  money  for 

A     No,  I  don't, 

Q     Is  it  possible  that  he  obtained  that  money  from 
Dick  Secord? 

A     I  have  no  idea. 

Q     Did  you  ever  discuss  that  house  arrangement  with 
Dick  Secord? 

A     No.   I  don't  recall  discussing  it  with  Secord. 

E'FEOCIIAl.  «tl>0«Tt«S.   INC 





Q     Did  you  ever  discuss  it  with  Clines  in  Secord's 

A     No.   I  have  no  memory  of  that.   I  can't  say  that 
I  did.   I  can't  say  that  I  didn't.   I  just  don't  have  any 
memory  of  it. 

Q     Was  the  amount  that  you  were  paid  out  greater  or 
less  than  your  initial  investment? 

A     1  made  some  money  on  that. 

Q     How  much  money?  ' 

A     I  do  not  have  any  idea  at  this  time. 

MR.  MC  KAY:   I  don't  think  they're  in  there, 
because  it's  pre- '82  document.   I  think  we're  talking  about 
an  individual  family  house.   We're  not  talking  about  an 
apartment  building  or  an  industrial  complex.   We're  not 
talking  about  very  much  money. 

Q     Do  you  recall  ever  discussing  this  transaction 
with  Ed  Wilson? 

A     No,  I  don't. 

Q     Do  you  know  whether  Ed  Wilson  was  the  source  of   ; 
Clines'   money? 

A     I  don't.   I  really  don't. 




Q     Did  Clines  ever  say  that  he  was? 

A     No,  he  didn't. 

Q     Were  you,  Clines  and  Wilson  ever  together  when 
this  deal  was  discussed? 

A     I  have  no  memory  of  our  being  together  for  a 
discussion  of  this  transaction. 

Q     How  did  Clines  pay  you? 

A     With  a  check  through  a  real  estate  attorney  in 



Q     Did  that  check  reflect  the  entire  amount  that 
Clines  gave  you  in  relation  to  this  transaction? 

A     Yes.   That's  my  memory  of  it. 

Q     Did  you  receive  any  cash  at  all  in  relation  to 
this  property  at  any  time? 

A     No,  I  did  not. 

Q     Let's  go  forward  with  Mr.  Clines. 
What  was  your  next  — 

A     We  were  both  here  in  the  Washington  area. 

What  else  is  there  to  say?   I  mean,  that  was  it 

Was  there  only  one  check? 

Yes.   As  far  as  I  can  recall,  there  was  only  one 






When  did  you  first  become  aware  that  Clines  was 

]   involved  in  Central  America  supply  efforts? 

C-fCMIIM.  atfOITtllS.   INC 

A     I  think  when  I  got  that  subpoena. 
Q     Which  subpoena? 

A     Not  the  subpoena.   The  Christie  Institute  papers. 
Q     Did  you  talk  with  Clines  about  it? 
A     I  tried  to  track  him  down.   I  don't  remember 
talking  with  him.   He's  a  very  hard  guy  to  track  down. 

Q     You've  never  discussed  that  lawsuit  with  Clines? 
A     I  don't  ever  recall. 

MR.  MC  KAY:   Clines  was  present  at  the  meeting 
with  Mr.  Green  and  Mr.  Secord,Mr.  Shackley  and  myself. 
Mr.  Green  represented  Clines. 

MR.  HOLMES:   Was  anybody  else  present  at  that 

MR.  MC  KAY:   No. 
Q     Other  than  that  occasion,  you  never  discussed 
this  with  Clines? 

A     I  don't  have  any  recollection  talking  with  him. 
Q     That  was  the  first  time  you  found  out  about 
Clines'  role  in  contra  supply? 





MR.  MC  KAY:   I  don't  want  to  confuse  you.   The 
meeting  isn't  the  first  time.   It  was  when  he  got  the 
subpoena.   He  said  that  was  the  first  time.   We've  discussed 
the  meeting  in  between. 

MR.  HOLMES:   You  don't  mean  the  subpoena.   You 
mean  the  complaint.   That  was  just  an  allegation. 
THE  WITNESS:   The  complaint. 

My  knowledge  of  this  Christie  Institute  thing 
came  about  when  we  were  served  papers  by  the  Christie 
Institute.   He  is  listed  in  that  complaint.   All  right? 
That's  when  I  found  out. 
Q     That's  just  an  allegation.   I  want  to  know  when 
you  learned  from  some  other  source  that  he  has  something  to 
do  with  it. 

You're  saying  that  this  meeting  with  all  the 
lawyers  and  Secord  and  Clines  was  it. 

A     Yes.   That's  my  memory  of  it. 

Q     And  you've  never  discussed  it  with  Clines  since 

A     No.   I  have  not  talked  to  him  since  then. 
Q     You  haven't  talked  to  him  at  all  since  then? 




A     No.   I  haven't  talked  to  him. 

THE  WITNESS:   Can  we  take  a  break  here? 
MR.  HOLMES:   Sure.   Go  ahead. 
(Recess. ) 

Q     Did  you  know  where  Clines  was  during  '85  and  '86? 

A      No. 

Q     You  don't  recall  his  spending  time  in  Egypt? 

A  No.  From  time  to  time,  people  would  ask  me,  have 
you  heard  of  him,  have  you  seen  him?  We're  looking  for  him, 
and  so  forth,  but  I  didn't  know. 

Q     Let's  start  with  Mr.  Quintero.   Would  it  be  a 
fair  characterization  of  what  you  said  already,  that  you 
didn't  know  that  Quinterc  was  involved  in  Central  American 
supply  either  until  it  became  public? 

A      Right. 

Q  You  hadn't  heard  what  he  was  doing  from  any  other 




No,  I  had  not. 

When  di  d  you  first  meet  Quintero? 

I  first  met  him,  to  the  best  of  my  recollection. 

after  I  retired. 

:E-rco{iui  •EroaTEiis   inc 




Q     How  did  you  meet  him? 

A     I  was  introduced  to  him  by  Mr.  Clines. 

Q     What  was  the  occasion? 

A     The  occasion  was  discussion  of  the  API  business. 

Q     Who  was  present? 

A     I  don't  know.   Come  on. 

Q     Who  was  involved? 

A     All  I  remember  is,  I  met  Quintero  through  Clines,  . 
and  I  remember  discussing  the  API  bid  procedure  for  selling 
valves  and  flanges. 

Q     This  was  the  same  business  you  mentioned  earlier, 
involving  Quintero,  Finney  and  Chavez? 

A     Right. 

Q     From  that  point  forward,  what  has  your  contact 
with  Quintero  been? 

A     Essentially  that.   In  other  words,  during  the 
time  that  I  was  working  with  API  on  that  particular  project, 
I  worked  with  Quintero  on  the  Mexican  market,  valves,  flanges 
and  so  forth. 

Since  then,  I  think  maybe  I've  seen  him  once  or 
twice  in  Washington  at  some  social  occasion. 

Q     No  other  business  with  him  at  all? 







When  did  you  meet  Felix  Rodriguez? 
I  met  Felix  when  I  was  in  Vietnam. 
And  from  that  point,  when  did  you  deal  with  him 

A     No. 




A     I  think  when  I  came  back  to  Washington,  he  retired 
shortly.   He  had  a  medical  disability.   He  retired  on  a 
medical  disability,  when  I  was  still  in  government. 

He  came  up  here  for  medical  papers  or  something 
like  that.   I  would  see  him  in  a  social  context. 

Q     Were  you  still  with  the  agency  at  the  time? 

A     Yes. 

Q     Did  you  discuss  his  medical  retirement  with 
anybody  at  the  Agency? 

A     I  remember,  I  think  when  his  papers  were  being 
processed,  and  so  forth,  I  think  somebody  came  around  and 
asked  me  what  he  did  in  Vietnam.   I  remember  the  specifics, 
some  of  the  crashes  that  he  was  involved  with,  and  so  forth. 

Q     Would  it  be  giving  you  too  much  credit  to  credit 
you  with  helping  him  get  his  medical  disability? 

A     I  think  he  got  it  on  its  merits.   I  mean,  he  was 
in,  I  forgot  how  many  crashes  he  was  in.   He  was  in  two  or 




-  !l 



three  helicopter  crashes  and  got  a  bad  back.   He  applied  for 
medical  retirement,  based  on  the  advice  of  the  medical  staff, 
and  then  there  was  regular  paperwork.   I'm  sure  I  was  one 
of  several  people  that  people  came  around  to  discuss  what  his 
service  had  been  in  Vietnam  and  what  was  the  nature  of  his 

Q     When  did  you  speak  with  him  again  after  the 
medical  disability  conversations? 

A     After  I  retired,  I  continued  to  maintain  social 
contact  with  him. 

Q     Have  you  ever  had  any  business  contact  with  him? 

A     There  are  some  items  in  here.   We  tried  to  get 
him  to  help  us  open  the  Venezuelan  market  for  modular  storage 

Q     When  was  that? 

A     Well.   1  think  that  was  the  TGS  thing,  if  I  can 
find  it. 

(A  pause.) 

Q     I  just  want  to  know  about  when  it  was.  i 

A     We've  been  at  this  for  a  long  time.   We're  running 
around  for  a  different  lot  of  dates,  and  I  simply  do  not 
remember  the  date . 

i-rcKiAL  acratTcnt.  ihc 





MR.  MC  KAY:   Sometime  after  '79. 

THE  WITNESS:   It  had  to  be  sometime  in  maybe 
i;  1980  or  '81.   I  don't  know. 

You  keep  pressing  for  dates,  and  I'm  telling  you, 

it's  in  the  file  there. 

MR.    HOLMES:   I'm  just  trying  to  get  an  idea  of 

where  we  are  in  time. 


Q     Since  that  time,  have  you  had  any  dealings  with 

Mr.  Rodriguez? 

A     Occasionally.   I  haven't  seen  him  for  a  number 

of  years.   Occasionally,  he  would  come  to  Washington,  and 

I  would  see  him  when  he  came  to  Washington.   He  was  involved 

with  Radio  Marti,  and  I  would  see  him  when  he  came  to 


I  haven't  seen  him  now  in  quite  a  while. 

Q     Other  than, the  Radio  Marti  contacts  then,  and 

random  social  contacts,  you  haven't  had  any  contact  with 

him  since  the  modular  storage  conversations? 

A     I  don't  remember  anything  specific.   Let's  see. 

(A  pause. ) 

I  knew  at  one  time,  on  one  of  his  trips  that  he 




was  trying  to  go  to  El  Salvador.   He  constantly  was 
traveling  in  and  out  of  Central  America. 

Q     Did  you  ever  discuss  the  helicopter  situation 
with  Felix  Rodriguez? 

MR.  MC  KAY:   I  object  to  that.   "Helicopter 
situation. " 


Q     Some  kind  of  business  arrangement  involving 
helicopter  parts  or  the  sale  of  helicopter  parts? 

A     He,  at  one  timcj  was  involved  in  trying  to 
build  a  helicopter,  a  one-man  or  a  two-man  helicopter  with 
some  inventor  genius  in  Miami .   I  remember  talking  to  him 
about  that,  but  at  this  point  in  time.  I  don't  recall  any 
other  helicopters.   Wait  a  minute. 

He  talked  with  —  helicopters.   I  think  he 
talked  with  a  fellow  who  was  the  representative  of 
Augusta  Bell,  to  try  to  sell  helicopters  to  —  I  don't 
know  whether  that  was  Guatemala  or  Honduras . 

Q     Let's  see  if  we  can  flesh  that  out  a  little  bit. 
What  was  your  relationship  with  Augusta  Bell? 

A     I  don't  have  any  relationship  with  Augusta  Bell. 

Q     Have  you  had  any  business  discussions  with  him 

-.l-ftouM.  •[Porrciis.  inc. 




about  helicopters? 

A     There  was  an  Italian  representative  that  rented 
space  from  me  for  a  while  who,  among  other  things,  worked 
on  Augusta  Bell  helicopter  sales. 

Q     His  name  was? 

A     Pavone. 

Q     He  was  a  representative  for  Augusta  Bell? 

A     Yes. 

Q     I  don't  know  what  his  contractual  relationship 
was  with  Augusta  Bell,  but  he  represented  Augusta  Bell. 

Q     For  the  sale  of  the  helicopters,  I  take  it? 

A     Yes. 

0     Did  you  ever  receive  any  payment  or  expenses  from 
Augusta  Bell  for  any  work  that  you  did? 

A     No. 

Q     He  was  simply  renting  space  from  you? 

A     He  was  renting  space  from  me. 

Q     Was  this  in  some  way  related  to  Felix  Rodriguez? 

A     Felix  talked  with  him  about  marketing,  or  he 
talked  with  Felix  about  marketing  helicopters  in  Central 
America . 

Q     Was  Guatemala  the  only  country  they  talked  about 







A     What  I  gave  you  in  my  answer.   It's  either 
Guatemala  or  Honduras.   I  don't  remember  at  this  point. 

Q     This  is  approximately  when? 

A     Sometime  in  the  '80s. 

Q     Do  you  know  whether  any  of  those  conversations 
Ccime  to  fruition  in  the  sale  of  a  helicopter? 

A     To  the  best  of  my  knowledge,  there  was  no  sale 
made . 

Q     With  whom  were  they  speaking  in  the  Central 
American  countries?   Do  you  know? 

A     No,  I  don't.   I  don't  recall  who  they  were  in 
dialogue  with.   They  were  in  touch  with  the  government,  with 
whatever  government  it  was.   They  were  in  touch  with  the 
government  or  somebody  who  had  a  sales  commission  or  the 
right  to  go  out  and  find  the  helicopter  or  something. 

Q     Do  you  recall  any  conversations  with  anybody 
about  a  radar  device  operable  from  a  helicopter? 

A     No.   I  don't  recall  anything  about  a  radar 
device  from  a  helicopter.   To  do  what?  ■ 

MR.  MC  KAY:   You've  answered  the  question. 
Let  him  go  on. 

:E-rEi>caAi  depodteiis.  inc 






Q     I'm  recalling  something  that  you  said  in  the 
I  interview  I  had  with  you  back  in  the  beginning  of  the  year, 
but  I'll  look  it  up  and  ask  you  on  Monday. 

So  you  were  aware  of  these  conversations  with 
Felix  Rodriguez  relating  to  Augusta  Bell  and  the  sale  of 
helicopters   and  to  Central  America,  but  you  weren't 
financially  interested  in  the  conversations.   Is  that 

A     Yes.   That's  basically  correct. 

Q     So  if  the  sales  had  gone  forward,  you  wouldn't 
have  benefited  in  any  way  from  the  sales? 

A     If  the  sales  had  gone  forward,  I  might  have  then 
put  in  a  proposal  for  handling  the  logistics  problem-solving 
on  the  spare  parts.   In  other  words,  how  could  they  store 
the  spare  parts. 

Q     So  back  in  your  mind,  then,  there  was  the  storage 
sales  situation? 

A     Had  there  been  a  sale,  but  there  wasn't.   It 
was  just  a  discussion  of  the  sale.   It  was  a  long  way  from 
that  to  trying  to  plan  a  logistics  system  to  go  with  a  sale 

that  never  took  place. 





Q     I  understand. 

When  was  your  next  contact  with  Felix  Rodriguez? 

A     I  recall  him  calling  me  on  Christmas  Day  1986. 

Q     What  did  he  want  to  call  you  about? 

A     He  said  that  he  had  just  heard  that  I  had  been 
sick  and  had  had  a  serious  operation.   He  wanted  to  know  how 
I  was  and  wished  me  Season's  Greetings.   That  was  it. 

Q     At  that  point  in  time,  you  had  already  been  sued; 

A     Right. 

Q     He  didn ' t  discuss  that  with  you? 

A     I  really  didn't  want  to  talk  with  him,  to  be 
honest  with  you,  at  that  particular  point.   I  didn't  know 
what  the  hell  he  was  doing.   He'd  been  away.   I  hadn't  seen 
or  heard  from  him  for  a  very  long  period  of  time.   I  just 
took  the  Season's  Greetings  and  let  it  go  at  that. 

Q     Have  you  ever  discussed  the  lawsuit  with  Felix 

A     Yes,  I  have.   I  have  since  discussed  the  lawsuit. 

Q     When  was  that? 

A     After  his  testimony  here  in  Washington,  and  he 
became  a  TV  celebrity. 





Q     Okay.   Was  there  more  than  one  discussion.' 

A     Yes.   There 've  been  about  two  or  three  telephone 
conversations.   Two,  I  think. 

Q     Just  by  phone? 

A     By  phone.   He's  avoided  me  ever  since. 

Q     What  was  said  about  the  lawsuit  by  Rodriguez? 

A     Well,  I  wanted  to  find  out  what  he  knew  about 
these  people  and  wanted  to  discuss  the  lawsuit  with  him. 
He  said  he  didn't  want  to  get  involved.   He  didn't  want  to 
be  involved  in  discussing  it  or  anything  else. 

Q     So  he  refused  to  discuss  it  with  you? 

A     Yes;  basically.   He  said,  "Let  me  consult  with 
somebody,  and  I'll  get  back  in  touch  with  you."   Then  he 
left  for  Central  America.   I've  never  been  able  to  catch  him 

Q     So  you  never  discussed  the  substance  of  the 

A     No.   I  discussed  with  him  what  I  wanted  from 
him,  and  that's  when  he  said  no. 

Q     What  did  you  tell  him  you  wanted  from  him? 

A     I  think  that's  part  of  our  strategy  of  what  I 
want  for  the  lawsuit,  and  I  don't  think  that's  germane  to 






MR.  MC  KAY:   Generically,  it  was  assistance  in 
helping  to  get  the  case  dismissed,  is  what  we  were  looking 


Q     Returning  to  Rafael  Quintero,  did  you  discuss 
the  lawsuit  with  him? 

A     No.   I  have  not  discussed  the  lawsuit  with 

Q     Never? 

A     Not  that  I  recall.   I  have  no  memory  of  talking 
to  Quintero  about  the  lawsuit. 

Q     I  return  to  the  list  which  is  the  appendix  to 
your  subpoena,  and  I  want  to  ask  you  about  the  Aspin  brothers, 
Leslie  and  Michael. 

Have  you  met  these  folks? 

A     I  have  not. 

Q     You're  certain? 

A     Yes. 

Q     If  I  were  to  tell  you  that  Leslie  Aspin  went  by  ] 
Leslie  Allen  at  times,  would  that  help  you? 
Do  you  know  a  Leslie  Allen? 






A     That  doesn't  ring  any  bells  with  me  whatsoever. 

Q     I  want  to  get  into  the  events  around  November  of 
1984.   I  understand  that  you've  written  a  memorandum  on  this, 
but  the  Leslie  Aspin  aspect  of  that,  I'm  sure,  wasn't  in 
your  mind  when  you  wrote  the  memo. 

So  I  would  like  to  ask  you  some  specific 
questions  about  that. 

Exactly  who  was  present  at  your  meeting  with 
Ghorbanifar  and  where  did  it  take  place? 

A     The  meetings  with  Ghorbanifar  were  attended  by 
Mr.  Razmara. 

Q     You  said  "meetings" ;  correct? 

A     Yes. 

Q     Let's  get  the  first  one  first.   Then  we'll  progress. 

A     I  mean,  you  have  to  sort  of  look  at  this  as  a 
sequence.   This  file  in  here  —  could  we  look  in  the  file? 

Q     Sure. 

(A  pause. ) 

A     We  met  on  the  20th  of  November.   During  the  20th 
of  November  we  had  several  meetings.   I  think  we  had  a 
meeting  with  Ghorbanifar,  General  Manucher  Hashimi  —  not 
to  be  confused  with  Cyrus  Hashimi. 





So  Razmara,  General  Hashimi ,  myself  and 
Ghorbanifar . 

Q     The  four  of  you  were  the  people  present  at  both 
of  the  meetings  that  occurred  that  day? 

A     They  were  essentially  —  during  the  course  of  the 
day  there  were  three  meetings.   There  was  one  very  brief 
meetino,  where  we  were  introduced.   General  Hashimi  introduced 
Mr.  Razmara  and  me  to  Ghorbanifar.   We  did  not  know  him. 
We  did  not  expect  to  meet  him.   He  didn't  expect  to  meet  us.. 

MR.  MC  KAY:   The  question  on  the  table  is,  who 
was  present  at  each  meeting. 

So  just  answer  that.   We'll  get  along  faster. 
Q     Where  was  it? 

A     In  the  Vier  Jahreszeiten  Hotel  in  Hcunburg. 
Q     What  led  up  to  the  meeting.   How  did  you  happen 
to  be  in  the  Four  Seasons  Hotel? 

A     I  cover  events  in  the  Iran-Iraq  War.   Mr.  Razmara 
helps  me  cover  events  in  the  Iran-Iraq  War.   He  knew  General 
Hashimi-   I'd  been  talking  with  him  on  the  telephone  and 
exchanging  views  about  the  war  over  a  period  of  time. 
General  Hashimi ' s  views  on  the  war  were  very  insightful. 


4   ^    W' 




accurate.   Therefore,  I  decided  that  we  ought  to  get  to 
understand  this  guy  better. 

On  some  occasion,  I  think  it  was  October  of  '84, 
General  Hashimi  came  to  the  United  States,  to  California,  to 
see  his  daughter  and  grandchildren.   He  was  out  there  for 
sometime.   Mr.  Razmara  and  I  flew  out  there  to  meet  hiir^,  to 
talk  to  him  about  the  war,  and  so  forth.   We  got  along  very 
well.   It's  the  first  time  I'd  ever  met  him  and  got  along  very 
well,  I  thought.    Very  interesting  guy.   At  the  end  of 
our  discussions  out  there,  he  said  th£.t  he  frequently  met 
with  people  from  Iran.   Given  our  interest  in  ".he  war,  he 
would  introduce  us  to  sc«ne  interesting  people  the  next  time 
he  came  out, that  he  felt  it  was  worthwhile  to  talk  to.   That 
was  the  background. 

He  called  us  up  in  late  October  and  said,  there 
are  some  interesting  people  probably  coming  out.   Why  didn't 
we  meet  with  them,  and  ^o  forth.   And  we  agreed  to  a  meeting 
that  was  postponed. 

Tlien  we  met  him  in  Hamburg  on  the  morning  of 
the  20th,  as  I  recall.   We  got  there,  I  think,  the  night  of 
the  19th. 

Q     So  you  and  Mr.  Razmara  traveled  to  Hamburg  for 




the  sole  purpose  of  meeting  — 

A     Meeting  with  General  Hashimi,  who  was  going  to 
introduce  us  to  interesting  Iranians  who  ware  traveling  in 
Europe  at  that  time  and  from  Iran. 

Q     This  is  all  on  an  open  expense  account,  I  gather, 
with  your  primary  client  in  the  oil  business? 

A     Yes. 

MR.  MC  KAY:   I  don't  know  what  you  mean  by 


"open. " 

THE  WITNESS:   I  don't  know  what  you  mean  by 


Q     It's  a  discretionary  thing  for  you  to  fly  out. 
You  don't  have  to  call  up  Dois  and  say,  "Can  I  do  this?"   You 
have  the  discretion  to  do  as  you  please  and  bill  him  for  it; 

A     Well,  it's  in  the  total  billing. 

Q     You  didn't  have  to  do  any  actual  business 
transaction  in  Hamburg  to  make  it  worth  your  wiile  in  r 
business  sense.   You  were  paid  to  go  there  and  find  out  what  I 
the  man  had  to  say. 

A     I'm  paid  to  know  what  is  generally  happening. 





What  way  is  the  war  going  to  go.   What's  the  trend  forecasted, 
and  so  forth. 

Q     Okay.   So  there's  a  first  meeting  in  the  morning, 
and  that's  when  you  were  first  introduced  to  Ghorbanifar? 

A     Right. 

Q     Then  there's  a  second  meeting  and  a  third  meeting 
all  on  the  same  day? 

A     Yes. 

Q     And  are  the  four  people  that  you've  named  the 
same  people  who  meet  at  the  second  and  third  meeting? 

A     No.   In  the  second  meeting,  there  is  an  Iranian 
from  Iran,  who   is  present  at  the  meeting. 

rcDCtAt.  iicraiTcas   INC 





Q     And  the  third  meeting? 

A     The  third  meeting  was  in  the  evening. 
Mr.  Razmara,  General  Hashimi  and  I  were  staying  in  this 
hotel,  the  Four  Seasons  Hotel,  and  at  the  end  of  the  day, 
we  were  sitting  down  to  have  a  drink,  and  Mr.  Ghorbanifar 
came  back  into  the  hotel,  and  we  had  a  drink  with  him. 

Q  But|i|H|0^BKdid  not  reappear    ^°^  the  third 


A  No. 

Q     Did  you  see  any  Americans  in  Hamburg  during  you 

A     No. 

Q     How  long  did  you  stay  in  Hamburg  on  that 

A     As  I  recall,  we  arrived  on  the  19th.   The 
meetings  were  on  the  2  0th,  and  we  took  off  on  the  morning 
of  the  21st  or  midday  on  the  21st. 

Q     And  you  say  no  Americans  in  Hamburg  during  those 
three  days,  19,  20  and  21? 

E-rcocuL  MraarEis.  inc 




-    !t 

A     I  have  no  recollection.   I  had  no  discussions 
with  any  Americans.   I  mean,  maybe  somebody  was  in  the 
lobby  of  the  hotel,  who  I  didn't  know  was  American,  but,  no, 
I  didn't  have  any  conversation  with  any  Americans. 

Q     At  that  point  in  time ,  did  you  know  Oliver  North? 

A     No.   I  did  not  know  Oliver  North. 

Q     You  wouldn't  have  known  him  if  you'd  seen  him? 

A     I  would  not  know  him  if  I  saw  him. 

Q     Did  you  know  Earl,  Robert  Earl? 

A     No.   I  don't  think  so.   I  don't  think  I've  ever 
met  Earl.   I  don't  know. 

Q     Did  you  speak  with  or  socialize  with,  in  any 
way,  any  British-speaking  persons  there  in  Haunburg  during 
these  three  days? 

A      NO. 

Q     Was  there  any  discussion  during  those  meetings 
of  the  sale  or  potential  sale  of  any  missiles  to  Iran? 

A     No.   Not  really.   In  one  of  the  early  discussions 
with  Ghorbanifar,  he  asked  if  there  was  scane  way  maybe  he 
should  work  toward  establishing  his  bona  fides  with  the 
Americans  when  he  was  discussing  this. 

I  said,  "What  do  you  have  in  mind?" 

E-fEOCIAt.  •Cra«TE*S.   INC 





He  said,  "There' s  mU^^H.  equipment .   Iran  has 
equipment.   Maybe  we  could  provide  that  to 
the  Americans  to  show  that  we  have  good  contacts  and 
establish  our  bona  fides." 

I  said,  "What  are  you  thinking  of?" 
Q     Let  me  slow  you  down  for  one  second. 

You  said  in  one  of  the  early  meetings.   Are  you 
taling  about  the  20th  or  some  shortly  thereafter? 

A     No.   I  told  you  before,  I  only  met  him  once,  on 
this  day,  on  the  20th,  and  then  in  one  of  these  conversations-, 
this  came  up.   I'm  trying  to  see  if  I  can  refresh  my 
memory . 

Q     So  when  you  say  one  of  the  early  meetings,  you 
mean  one  of  these  three  meetings  we're  talking  about? 

A     Right.   It  was  not  the  third  meeting,  but  either 
the  first  or  second  meeting  on  the  20th. 
(A  pause.) 
Did  you  get  into  any  further  details  on  what 

equipment  they  had? 
No,  because  I  covered  that.   He  said,  in  return  ■ 
[Tehran  would  want  TOW  missiles.   I 

kind  of 






told  him  they  ought  to  find  a  simpler  way  to  establish 
his  bona  fides,  if  he  wanted  to  deal  with  the  Americans. 
Q     He  didn't  tell  you  what  kind  of  interesting 
|equipment  he  had? 

But  he  specified  TOW  missiles? 
Right.   TOW  missiles  did  come  up. 
That  was  the  only  time. 

Oid^^H^Bhave  anything  to  say  about  TOW  missiles? 
Was  he  present  for  that  conversation? 

A     I  don't  think  so.   That  came  up  in  one  of  these 
conversations.   I  don't  think  so. 

Q     So  if  he  was  present,  you  don't  recall? 
A     I  don't. 

Q     Was  there  further  discussion  about  the  TOWs? 
What  kind  of  TOWS? 
A     No. 

Q     Would  you  even  be  familiar  with  the  TOWs? 
A     Not  particularly,  but  you  know,  I've  told  you 
this  before,  I  don't  deal  with  anything  that  booms  or 
bangs.   As  soon  as  I  heard  TOW  missiles,  I  said,  forget  it, 
you  know.   Find  something  simpler.   That's  when  I  asked 






him  if  he  had  ever  been  in  touch  with  the  CIA.   That's 
when  he  told  me,  yes,  he'd  been  in  touch  with  the  CIA^^H 

'but  they'd  used  him  like  a  piece  of  Kleenex, 
wanted  to  use  him  and  throw  him  away.   That  was  his  famous 

I  told  you  this  guy  —  you've  probably  met  him. 
You've  probably  talked  with  him.   He's  flip. 

Q     After  the  meeting  in  Hamburg,  where  did  you  go? 

A     As  I  recall,  I  went  to  London  and  then  from 
London  back  to  Washington. 

Q     Have  you  ever  met  with  Hashimi ,  Ghorbanifar  or 
^^^Ln  Frankfurt? 

A     No. 

Q     Have  you  traveled  from  Hamburg  to  Frankfurt  by 
U.S.  military  plane? 

A     No.   I  mean,  wait  a  minute.   U.S.  military  plane 
what?   In  this  period,  1984? 

Q     Yes. 

A     No. 

Q     Do  you  know  the  name  Mansur  Alkazar? 

A     No,  I  don't. 

Q      Do  you  know  the  name  Batturji? 






A     No.   These  are  new  names  on  the  list.   I  don't 
recognize  them. 

Q     I  wouldn't  expect  you  to  have  records  of  those 
dealings . 

MR.  SABA:   Excuse  me.   It  might  be  pronounced 

Battur ji. 

THE  WITNESS:   It's  not  a  name  — 
MR.  MC  KAY:   How's  it  spelled? 
MR.  SABA:   B-a-t-t-u-r- j-i . 

MR.  HOLMES:   He ' s  a  London  resident.   He  lives 
in  England. 

Q     During  1984  did  you  speak  —  and  I  hope  you 
understand  when  I  said  "speak  with,"  I  meant  speak  with,  by 
phone  or  in  person,   I  gather  from  your  answers,  you 
understood  that,  any  British  arms  dealer  at  all. 
MR.  MC  KAY:   This  is  1984? 
MR.  HOLMES:   1984. 

THE  WITNESS:   No.   As  a  matter  of  fact,  no,  I 
haven' t. 

Q     Have  you  ever  been  present  when  a  transaction 


u-riKtu.  HEPoaicKS  inc 


-   il 


involving  TOWs  was  being  discussed,  other  than  the  one  that 
you  just  mentioned? 

A     No.   I  have  no  recollection,  but  I  know  there's 
a  transaction  in  there,  I  told  you,  with  the  Portuguese. 
There's  a  Portuguese  friend  of  mine  who  represents  a 
Portuguese  arms  industry  thing.   He  talks  about  arms  and 
and  so  forth,  but  they  don't  have  TOWs.   I  don't  recall  any 
conversations  with  him  about  TOWs. 

Q     They  do  have  TOWs. 

A     Do  they?   You've  contributed  to  my  education.   I 
didn't  they  have  it. 

Q     They  manufacture  the  delivery  vehicles  and  sell 
TOWs  as  an  add  on.   You  didn't  know  that? 

A     No. 


Q     I'm  sure  you're  aware,  because  I've  seen  your 
denials  in  the  press,  of  the  allegations  of  this  Leslie 
Aspin  and  his  brother  Michael.   I've  tried  to  cover  the 
territory  myself,  but  I  would  like  you  to  tell  me  why  it's 
not  true.   I'm  sure  you've  given  it  some  thought. 

Tell  me  the  most  salient  facts  that  disprove 
the  Aspin  allegations  as  you  see  them. 

A     First  of  all,  I  didn't  meet  him.   That's  as 

:fiti(iM..uniiiin   inc 





simple  as  that.   Too,  Mr.  Razmara  and  General  Hashimi  were 

there,  and  they  will  say  that  I  didn't  meet  them.   More 



i   importantly,  Aspin  told  the  newspaper  guy  that  he  did  not 

talk  with  me  in  Hamburg.   He's  changed  his  story  slightly, 


I   and  he  now  says  that  he  saw  me  in  Hamburg  but  he  did  not 


I   talk  to  me. 


I  I've  written  a  letter  to  the  the  "London  Observer. 

They  published  it.   I  got  a  call  from  Scotland  Yard.   If 

the  Scotland  Yard  guy  is,  in  fact,  bona  fide,  and  he  comes 

here  and  meets  me  at  the  British  Embassy,  I  will  give  my 

deposition  to  the  effect  that  I  did  not  meet  Mr.  Aspin  in 

Hamburg  in  November  20,  1984,  and  I  did  not  talk  to  him. 

Q     In  any  of  your  discussions  with  Ghorbanifar  or 
Hashimi,  was  there  any  discussion  of  the  sales  of  TOWs , 
other  than  the  exchange  f or ^^H^^^| equipment? 

A     No. 

Q     Was  there  ever  any  discussion  amongst  any  of 
the  people  at  this  meeting  or  this  series  of  meetings,  I 
should  say,  to  include^^^^^f  about  arranging  for  a 
payment  for  any  weapon  for  Iran? 

A      No. 

Q     For  example,  setting  up  a  bank  account,  getting 

cMUi  aiivaTEts   inc 





a  Certificate  of  Deposit,  an  insurance  certificate  or  any 
paperwork  at  all,  relaced  to  an  arms  deal,  it  didn't  happen? 
A     It  didn't  happen. 

MR.  HOLMES:   Do  you  want  to  carry  this  forward? 

Q     Mr.  Shackley,  I  introduced  myself  before.   My 
name  is  Timothy  Woodcock.   I  too  am  an  Associate  Counsel 
with  the  Senate  Committee. 

Let  me  return,  if  I  may,  to  the  meetings  that 
you  had  on  November  20  with  Ghorbanifar. 

When  you  met  ^^^^^^^^^^^^^^^^^|  did  you 
understand  that  he  held  any  kind  of  political  position  or 
was  affiliated  with  any  political  faction  within  Iran? 

A     He  talked  about  his  views  of  the  situation  in 
Iran  and  that  there  were  factional  groupings,  but  I  don't 
speak  Farsi,  so  all  this  conversation  was  being  translated 
for  me  by  —  primarily  by  Mr,  Razmara. 

Q     Did  he  associate  himself  with  any  of  the  groupings? 
A     No.   He  just  identified  various  groups,  talked 
about  groups  being  in  existence,  but  he  didn't  really  come 
down  clear-cut  and  say,  you  know,  I'm  in  this  group  or  in 

'COMAl  «(M»TC*S.    INC 






that  kind  of  a  definition. 

Q     Was  his  presence  there,  did  you  understand  that 
to  be  to  give  you  a  briefing  on  politics  in  Iran  or  did  that 
I   just  happen? 

A     No.   I  think  my  understanding  of  the  meeting  was, 
here  was  an  interesting  guy  coming  out  of  Iran.   Ghorbanifar 
is  a  guy  who  is  a  deal  maker.   What  I  understood  Ghorbanifar 
to  be  is  a  guy  who  is  finding  somebody  coming  out  on  a 
purchasing  mission,  opening  a  dialogue  with  him,  if  he  didn't 
know  him,  taking  care  of  their  administrative  needs,  hotels, 
women,  wine,  finding  out  what  they  wanted  to  buy,  have  the 
guy  stay  in  the  hotel.   Then  Ghorbanifar  goes  out  and  finds 
the  product  for  them  and  puts  the  deal  together  and  gets  his 
commission  from  the  manufacturer. 

Q     Excuse  me.   What  was  in  it  for  him  to  put  you 
in  contact  withi 

A     Nothing.   In  other  words,  he  had  whatever  deal 

he  was  chasing  with^^^^^Hon  prosthetic  devices .   Somewhere 

in  Scandinavia  and  Germany,  he,  Ghorbanifar,  and  Hashimi 

simply  talked  about  developments  in  Iran  all  the  time,  an   | 

exchange  of  information.   I  was  just  another  adjunct,  if  you 

will,  to  that  particular  exchange,  an  exchange  of  views. 





Q     DC  you  know  whether^^^^^B  understood  that  your 
prior  career  had  been  with  the  CIA? 

A     That  I  don't  know. 

Q     Certainly , you  didn't  tell  him;  is  that  correct? 

A  I  don't  advertise  that,  but  I  don't  hide  it. 
If  somebody  asked  me  were  you  with  the  CIA,  I  said  yes, 
but  I  certainly  don't  go  out  and  say  that's  what  I  did. 

Q     The  reason  I  ask  is,  I  think  the  Iranians  have  a 
sensitivity  to  persons  who  work  with  the  CIA,  because  of 
their  internal  politics. 

Would  you  agree  with  that? 

A     Yes.   They  certainly  would  be  sensitive  to  the 
fact  that  they  were  in  touch  with  ex-CIA  people. 

Q     And  that  there  might  be  a  political  liability 
for  them  back  home,  if  it  were  known  that  they  were  meeting 
with  ex-CIA  people? 

A  Also,  you  have  to  put  it  in  this  context.  I 
mean,  I  don't  think  they  knew  that,  because  you  have  to 
look  at  it  from  this  point  of  view:   I  am  ex-CIA. 

So  the  guy,  obviously,  he  didn't  have  that  sort  of  picture, 
I  don't  think. 






Q     Let  me  back  you  up  now.   You  mention  Mr.  Razmara. 
If  you've  covered  this,  just  tell  me. 
How  did  you  meet  him? 
A     I  covered  it. 

Q     It  was  through  Mr.  Razmara  that  you  met  Manucher 
Hashimi;  is  that  correct? 
A     Right. 

Q     Did  Mr.  Razmara  tell  you  what  his  prior 
relationship  was  with  Mr.  Hashimi? 

A     Yes.  They  were  colleagues. 

Q     Have  you  ever  heard  of  either  from  Mr.  Razmara, 
General  Hashimi  or  anyone  else,  o^  an  individual  by  the  name 
of  I 

A     Yes. 

Q     How  would  you  have  heard  of  this  person? 

I   met^^^^^^^^^^^^Bthrough 
Q     When  would  that  have  been? 

A     It  was  sometime  in  the  1980  --  1980,  that's  the 
best.    That  may  not  be  a  precise  date,  but  that's  the 
closest  I  can  come. 





Q     Do  you  recall  how  it  was  that  you  came  to  be 
I  introduced  to  him?  Why  Mr.  Hakim  introduced  you  to  him? 

A  There  are  two  aspects  of  it.  I  really  met  him  - 
Mr.  Hakim  was  thinking  of  bringing  him  to  the  United  States 
and  he  was  going  to  work  for  him  in  his  business. 

Q     What  business  was  that,  if  you  recall? 

A     Stanford  Technology.   Then  later,  at  some  point 
in  time,  we  put  on  an  English  language  training  program 

Q     This  is,  I  gather,  after  he  came  to  the  United 
States;  is  that  correct? 

A     Yes. 

Q     Did  you  meet  him  before  he  came  to  the  United 

States . 

Q     At  that  time  he  was  a  prospective  employee  of 
Mr.  Hakim's? 

A     Hakim's;  yes. 

Q     Now  how  long,  if  you  can  recall,  after  you  first, 
met  him,  did  he  come  to  the  United  States  to  enroll  in  your 
English  language  training  program? 

My  first  meeting  with  him  was  in  the  United 

-fCKUi.  rKraiTos.  inc 





Q     I  don't  have  any  sense  of  that.   I  just  remember 
Jl  meeting  him.   Then  there's  a  gap.   Then  after  some  sort  of  a 


|i  gap,  he  was  here  in  the  states,  and  we  put  on  maybe  a 

three-week  or  four-week  English  language  training  course  for 
ij  him. 
I       Q     Which  one  of  your  companies  ran  that  program? 

A     RAI ,  as  I  recall. 

Q     I  gather^^^^^^^^^^Hmust  have  had  some  basis 
in  English;  is  that  right? 

A     He  had  some;  yes. 

Q     Who  was  it  who  was  able  to  communicate  the 
English  language  to  him? 

A     In  terms  of  the  training? 

Q     Right. 

A     I  hired  two  or  three  people  to  teach  him. 

Q     Were  any  of  those  people  former  CIA  people? 

A     The  two  principal  instructors  were  girls;  no,  they 
were  not.   But  I  think  in  the  course  of  that,  we  also  --  we 
may  have  had  one  retired  person  sort  of  socialize  with  him 
in  the  evening,  so  he  would  continue  to  use  the  English 
language . 

Q     Who  would  that  have  been? 




h  I  would  have  to  go  back  -- 

Q     It  wasn't  George  Cave? 

A     No. 

Q  Do  you  recall  whether  Mr.  Hakim  ever  discussed 
with  you  the  possibility  of  setting  ^^^^^^^^^^Hup  in  an 
L.A.  business  out  on  the  Coast,  the  West  Coast? 

A     Let's  see.   There  was  a  time  when  Hakim  was 
involved  in  some  Korean  delis.   Korean  people  were  working 
for  him.   I  remember  that  coming  up  in  the  conversation, 
now  that  you've  jiggled  my  memory. 

Gosh,    1   don't   remember  whether   that   came   up  with 
>r   not. 

Q     Was  it  your  impression  that  he  went  to  work  for 

A     My  impression  is  that  whatever  deal  they  had  did 
not  come  to  pass,  because  after  that,  ^^^^^^^^^H went 
back  to  England. 

Q     Vfhat's  your  best  recollection  as  to  how  long 
he  was  in  the  United  States  when  this  all  came  apart  and 
he  went  back  to  England? 

A     It  was  a  short  period  of  time.   I  would  say  six 
weeks   but  that's  a  guesstimate  on  my  part. 

CDHAi.  aEraiTcas   inc 





Q     Did  either  Mr.  Hakim  ^^^^^^^^H  explain  to 
you  how  it  was  that  they  came  to  know  each  other? 

A     NO.   I  don't  recall  how  they  came  together. 

Q  After  this  initial  period  when|^^^BHy  =ai^e 
to  the  united  States  and  then  went  back  to  England,  did  you 
ever  meet  him  again? 

A     I  think  I  met  him  once  in  London. 

Q     How  did  that  come  about? 

A     I  picked  up  the  telephone,  called  him  and  had  a 
conversation  with  him.   I  think  my  wife  and  I  went  out  to 
dinner  with  him  and  his  wife. 

Q     Was  that  just  social? 

A     Yes. 

Q     Did  you  ever  come  to  understand  that  he,  himself, 
had  had  some  kind  of  past  relationship  or  continuing 
relationship  with  Manwher  Hashimi? 

A     No.   I'm  not  aware  of  any  --  I  think  they  know 
each  other,  but  I'm  not  aware  of  any  collaboration  between 
the  two  on  any  projects  or  anything.   I've  never  heard  that. 

Do  you  know  where  you  heard  that  from? 

fEKIU.  HiraiTCIIS    INC 





A     No,  I  don't. 

Q     Did  you  ever  see  them  together? 

A     No. 

Q    Did  you  ever  hear  that  they  had  had  a  parting  of 
the  ways? 

A     No,  I  haven't.   You  know,  let  me  clarify  one 

General  Hashimi's  English  is  not  very  good,  and 
when  I  basically  speak  to  him,  I  have  to  have  Mr.  Razmara  - 
there  to  carry  on  any  kind  of  a  lengthy  conversation,  other 
than  the  basic  social  amenities,  whereas ^^^^^^f  English  is 
quite  good  now. 

Q     Did  Mr.  Razmara  have  any  kind  of  a  relationship 
with  ^^^^^^^1  to  your  knowledge? 

A     I  think  they  simply  knew  each  other  from  Iran, 
but  I  don't  know. 

Q     Did  Mr.  Hakim  ever  tell  you  that  he  was 
recommending  or  thinking  about  reccxamendingj 

Ito  the  CIA  as  a  soiirce  for  the  CIA?  ; 

A      No. 

Q     Did  you  ever  know  of  that  from  any  other  source? 

A     No.   You're  introducing  a  new  thought.   I  had  not 


c-nottM.  MPwmM.  INC. 





heard  that  thought.   I  haven't  heard  that  idea. 

Q     Now  if  you've  answered  this  one,  tell  me,  please. 
How  is  it  that  you   met  Mr.  Hakim? 

A     I've  answered  that. 

Q     Do  you  recall,  after  having  met  Mr.  Hakim, 
recommending  him  to  the  CIA  as  a  possible  source? 

A     I've  covered  that. 

MR.  HOLMES:   If  we've  rushed  through  it,  if  you're 
going  to  cover  it,  cover  it  now. 

MR.  WOODCOCK:   All  right. 

Q     I  gather  that  you  do  recall  that  you  recommended 
Mr.  Hakim  to  the  CIA  as  a  source. 

A     I  would  not  use  your  words. 

Q     Use  yours,  please. 

A     I  had  a  meeting  with  Mr.  Hakim.   I  wrote  up  a 
memorandum  on  that  particular  meeting.   I  put  it  into  the 
appropriate  distribution  mechanism  at  the  Agency  and  people 
looked  at  Mr.  Hakim's  contacts  that  he  claimed  that  he  had, 
and  they  concluded  that  they  had  contacts  that  were  better, 
and  they  did  not  want  to  pursue  him,  and  the  matter  was 
dropped . 




Q     Okay.   If  you  can  recall,  how  long  had  you  known 
Mr.  Hakim  before  you  recommended  him  for  the  duties  you  just 
described  with  the  CIA? 

MR.  MC  KAV:   Do  you  accept  recommending  him? 
THE  WITNESS:   I  don't.   We're  having  a  little 
problem  here . 

You're  saying  "recommended,"  and  so  forth.  What 
I  did  is  — 

Q     —  floated. 

A     I  mean,  it's  not  unusual  for  an  intelligence 
officer  to  have  a  meeting  with  somebody,  come  back  and  write 
it  up,  and  in  the  scope  of  that  write-up,  saying  "I  met 
Mr.  Jones.   I  talked  with  him.   He's  got  the  following  five 
interesting  contacts.   Are  you  interested  in  any  of  these 

If  they  are,  then  you  start  trying  to  put 
together  a  scenario  for  figuring  out  how  to  get  to  those 
contacts,  not  necessarily  through  the  man  that  you  met. 
It  could  be  peeled  off  in  any  other  different  way.   That's 
what  I  did.   I  met  a  man,  wrote  a  memo,  identified  his 
contacts,  put  it  into  channels.   I  did  not  recommend.   I 

E-rtOfML  M»MT(M.  INC. 





don't  recall  recommending  one  way  or  the  other,  because  I'd 
only  met  the  man  once  at  that  time.   I  met  him  and  I  wrote 
it  up. 

Q     That's  what  I'm  trying  to  parse  through  here. 

Before  you  wrote  the  memorandum,  would  it  be  fair 
to  say  you  were  floating  him  for  whatever  he  may  be  worth  to 
the  Agency? 

Is  that  a  bad  way  to  put  it? 

A     No.   I  just  simply  was  reporting  a  meeting.   It's, 
a  standard  operational  procedure.   You  have  a  meeting  with 
an  interesting  person.   You  report  it.   And  that's  what  I 
did,  and  the  people  came  back  and  said  that  they  weren't 
interested,  and  I  dropped  it.   I  could  have  pursued  it.   I 
dropped  it. 

Q     Just  so  I  understand  this.   By  the  time  you 
wrote  the  memorandum,  you  had  had  one  meeting  on  which  the 
memorandum  was  based;  is  that  correct? 

A     That's  my  recollection. 

Q     Do  you  recall  how  it  was  that  you  had  met 
Mr.  Hakim? 

A     Yes.   I  previously  covered  that.   I  was 
introduced  to  him  by  Mr.  Wilson. 


>ci-nMiM.  aEPoaTEiis   INC 




Was  the  meeting  that  you  has  with  him  a  social 


It  was  a  luncheon. 
Was  that  in  the  area  here? 

Was  this  somebody  that  Mr.  Wilson  thought  you 
might  be  interested  in,  or  did  Mr.  Hakim  want  to  meet  you? 
What  were  the  dynamics  of  it? 

A     The  only  dynamics  were  that  Wilson  said,  "Here's 
a  guy  that  I  know.   I  think  you  might  enjoy  having  lunch  with 
him. " 

Q     Now  at  that  time ,  were  you  ADDO? 

A     That's  my  recollection,  yes. 

Q     For  the  record  is  the  acronym  for  Associate 
Deputy  Director  of  Operations? 

A     That's  correct. 

Q     Now  in  the  course  of  this  luncheon  that  you  had 
with  Mr.  Hakim,  I  gather  it  dawned  on  you  that  you  were, 
indeed,  having  lunch  with  an  interesting  character,  and  you 
begam  to  make   mental  note,  at  least,  of  the  information  that  ' 
he  was  giving  you  about  his  background,  and  so  on  and  so 
forth.   Is  that  correct? 


:c-rcoM«L  •(roiTUt.  inc. 




A  Right. 

Q     Was  that  information  that  you  then  transposed  to 
the  memorandum  and  put  into  the  system;  is  that  correct? 

A     That's  my  recollection  of  it. 

Q     Did  you  know  of  any  particular  needs  that  the 
Operations  Director  might  have  for  someone  like  Mr.  Hakim? 

A     At  that  time,  Iran  was  in  a  state  of  flux.   People 
were  looking  for  enhanced  coverage. 

Q     Do  you  recall  knowing  at  that  time  that  Mr.  Hakim 
also  knew  Mr.  Clines? 

A     I  just  don't  have  any  memory  of  dealing  with  that 

Q   '  Do  you  recall  enlisting  or  referring  this  matter, 
in  any  way,  to  Clines,  to  Mr.  Clines? 

A     I  wouldn't  have  any  reason  to,  you  know,  from 
what  I  can  remember,  I  wouldn't  think  that  he  would  be  -- 
I  mean,  you  can  find  out  these  answers  by  going  to  the  Agency 
and  finding  the  memo. 

Q     If  you've  already  covered  this,  tell  me. 

How  was  it  that  if  you  did  ever  meet,  how  did 
you  meet  General  Secord? 

A  I   covered   it. 


r-fCDCRAi  acniTHs  >nc 




Q     Do  you  knc*?  whether  you  would  have  known  General 
Secord  at  the  time  you  met  Mr.  Hakim  for  lunch? 
A     Had  I  known  Secord? 

By  that  time? 


You  met  him,  I  gather,  in  the  Vietnam  era? 

I  met  Secord  in  Laos,  somewhere  in  the  '66,  '68 





Q     Do  you  recall  knowing  ,at  the  time  you  met  Mr.  Hakxm, 
that  General  Secord  was  in  a  prominent  position  with  the  Air 
Force  in  Iran? 

Would  that  have  been  something  that  you  think  you 
would  have  known  at  the  time? 

A     Let's  see.  .  I  don't  know  that  I  can  relate  it  to 
that  particular  meeting. 

I  knew  that  Secord  was  in  Iran.   By  then,  I  knew 
—  I  think  he  was  a  general  by  then,  when  he  was  in  Iran, 
but  I  can't  link  when  I  knew  that  against  the  specific  one 
luncheon  over  here.   I  can't  make  a  track  for  you. 

Q     That's  all  right.   If  you  did  meet,  when  did  you 
first  meet  George  Cave? 

A     I  know  George  Cave,  and  I  met  him  in  the  Agency, 






but  I  can't  tell  you,  you  know,  I  can't  pin  that  down. 

Q     Would  it  be  fair  to  say  that  by  the  time  of  your 
retirement  in  1979  that  you'd  known  him  for  several  years? 

A  Yes.  I  had  known  him.  The  thing  is,  I  don't 
know.  I  mean,  my  recollection  is  I  knew  him  during  that 
period.   I  knew  him  before  '79. 

Q  Do  you  know  whether  the  memo  that  you  sent  into 
the  system  on  Mr.  Hakim  ever  Ceune  to  rest  with  Mr.  Cave  or 
whether  he  got  involved  in  it  at  all? 

A     No,  I  don't. 

Q     How  about  Mr.  Claridge?   Do  you  recall  him 
getting  involved  in  that  at  all? 

That  would  be  Dwayne  Dewey  Claridge. 

A     I  don't  recall  him  getting  involved  with  that, 
but  he  may  have.   I  don't  know.   I  don't  have  any  memory 
of  that. 

(A  pause. ) 

MR.  WOODCOCK:   I  think  that's  all  I  have  on  that 
subject  at  this  time. 

Why  don't  we  take  a  five-minute  break,  if  that's 
all  right? 

(Recess. ) 





;-nH>M.  wn«Tcas.  inc. 


Q     Mr.  Shackley,  I  have  only  a  few  more  questions  for 
'l  you.   Let  me  direct  your  attention,  if  I  may,  to  Manucher 

Hashimi  again. 

Following  this  meeting  that  you  had  on  November 

29,  1984,  did  you  ever  meet  with  him  again? 

A     No. 

Q     That  was  the  last  meeting  with  Hashimi? 

A     Yes. 

Q     I  had  understood  from  your  testimony  that  he  had 
been  a  useful  resource  for  you  in  dividing  the  goings  on 
in  the  Iran-Iraq  War. 

Given  that  that's  the  case,  wfcy  is  that  you 
didn't  see  any  more  of  him  after  November  of  '84? 

A     He  continued  to  talk  with  Mr.  Razmara,  and  as  I 
told  you  earlier,  his  English  is  less  than  perfect,  and 
Mr.  Razmara  has  been  in  touch  with  him. 

Q     So  Mr.  Razmara  has  been  in  touch  with  him  since 
November  of  '84;  is  that  correct? 

A     Right. 

Q     Does  that  continue  up  to  the  present? 

A     It's  been  some  time.   I  don't  know  when  the  last 





time  was  that  they  talked. 

Q     From  your  understanding  of  Manucher  Hashirai,  is 
he  considered  a  prominent  person  in  the  emigre  community, 
the  Iranian  emigre  community  in  Great  Britain? 

A     I  think  here  we  have  to  define,  he's  not 
prominent  as  a  political  figure .   I  think  he ' s  a  respected 
individual  as  somebody  who  continues  to  have  an  interest 
in  the  future  of  Iran. 

Q     I'm  going  to  put  some  names  out  for  you  and  ask 
you  if  they  are  feuniliar  to  you  in  any  way. 
The  first  name  would  bej 

A     I  may  have  run  across  it  in  FBIS  or  something, 
but  the  name  doesn't  ring  any  bells  with  me. 

How  about^^^^^^^^^^^^^l 

No.   It  doesn't  ring  any  bells. 

How  about 


How  about  ^^ 

[a  fairly  common  name.   You  would 
have  to  tell  me  some  thing  about  him  or  something,  but  the 
short  answer  is  no,  but  it  is  a  nam*  that  I've  seen  or  read 





in  FBXS  or  something  like  that. 

Q     He  has  an  alias.   Let  me  give  you  that. 

No.   That  doesn't  ring  any  bells  with 

He  has  another  alias. 

How  aboutJ 

That  name  is  familiar  from  FBIS  or  something  like 
that.   That's  the  kind  of  name  that  you  see. 
Q     Do  you  know  Charles  Allen? 
Yes.   I  know  Charles  Allen. 
From  your  days  with  the  CIA? 
Do  you  have  any  kind  of  ongoing  relationship  with 



Q     Have  you  had  any  relationship  with  him  since 
leaving  the  CIA? 

A     NO.   I  don't  ever  recall  running  into  him.   It's 
conceivable  that  I  was  at  some  big  party  or  something,  but 
I  have  no  memory  of  running  into  him  since  I  left. 




:E-flMiM.  atraaTEiis.  inc 

MR.  WOODCOCK:   That  does  it  for  me. 

Mr.  Shackley,  thank  you.   Those  are  all  the 


i-  questions  that  I  have. 


Q     MR.  Shackley,  I'm  wondering  if  you're,  familiar  with 
the  neime  of  a  company  called  Vinnell  —  V-i-n-n-e-1-1? 
A     Yes,  I  know  Vinnell. 

Q     Have  you  ever  had  a  business  relationship  with 

A     I  have  not . 

Q     Have  any  of  your  companies  had? 
A     We  have  not. 
Q     None  of  your  employees? 
A     No. 

Q     What  is  the  business  of  Vinnell,  to  your 

A     Vinnell,  at  one  time  ran  the  Saudi  National 
Guard  program. 

Q     When  you  say  "at  one  time,"  your  understanding 
is  that  they  no  longer  do  so? 

A     I  haven't  heard  anybody  speak  of  it  lately,  and 




I'm  simply  not  up  on  it,  so  I  don't  know  whether  that's 
still  on  or  not. 

Q     What  was  the  Saudi  National  Guard  program  at  the 
time  that  Vinnell  was  running  it? 

A     Generally,  what  I  know  is  that  it  was  a  training 
progrcun  for  the  Saudi  National  Guard. 

It  involved  air  support? 

I  have  no  idea.   I  know  nothing  about  it. 

Do  you  know  who  at  Vinnell  was  involved  in  that 




A  No.   The  only  person  that  I  know  of  that 
allegedly  worked  there  in  this  progreun  was  a  fellow  by  the 
name  of  George  Morton. 

Q  How  do  you  know  George  Morton? 

A  Mcmy,  many  years  ago,  he  was  in  Laos. 

Q  You've  kept  up  contact  with  Mr.  Morton  since 

A  I  haven't  seen  him  in  a  long  time,  but  people 

will  say,  "I've  seen  George,   he  says  hello."   "If  you  see 

him,  say  'hi,'"  if  sraneone  who  knows  us  says  hi. 

Q  Who  are  you  in  touch  with? 

A  Morton  was  a  colonel  or  lieutenant  colonel  in 

.  MratTfiis.  INC 





the  Special  Forces  or  something.   He's  known  to  a  lot  of  the 
Department . 

Q     What  was  his  relationship  with  Vinnell? 

A  My  understanding  was  he  worked  for  them.  That's 
all  I  know.  I've  heard  others  say  that  George  Morton  works 
for  Vinnell. 

Q     Did  he  have  a  particular  division  or  function? 

A     You're  trying  to  make  a  silk  purse  out  of  a  sow's 
ear.   I  know  nothing  further  than  what  I  was  going  to  say. 

Q     When  did  your  first  meet  Ollie  North,  or  have  you 

A  Yes,  I've  met  Ollie  North  once.  I  met  him  in  it 
must  have  been  June  1986. 

Q     In  what  connection  did  you  meet  him? 

A     When  I  was  at  a  lawyer's  office  talking  to 
Mr.  Secord  about  the  Miami  suit. 

Q     In  which  lawyer's  office? 

A     Mr.  Green's  office.   I  told  you  that  before. 

Q     I  didn't  catch  North's  name. 

A     No. 

Q     This  is  a  separate  meeting? 

A     No,  no.  I  was  at  —  no,  this  is  not  a  separate 

E-fiouAi.  acraiTEiis.  inc 





meeting.   I  went  to  see  Mr.  Secord  and  his  lawyer.   While  I 
was  there  discussing  the  Miami  case,  at  some  point  in  the 
meeting.  North  walked  in. 

Q     Who  was  present?   Yourself,  Green,  Secord,  North? 
Anybody  else? 

A     The  meeting  was  Secord,  myself  and  Green.   All 
right.   Then  at  some  point  during  that  meeting.  North  walked 
in.   Shortly  after  that,  I  left. 

Q     That's  the  only  time  that  you  ever  met? 

A     That's  the  only  time  I  know  that  I've  met  him  or 
seen  him. 

Q     What  did  he  say  while  he  was  there? 

A     He  wanted  to  talk  with  Secord  and  Green,  and  it 
was  clear  that  they  weren't  going  to  be  talking  while  I  was 
there . 

Q     Is  North  a  defendant  in  that  lawsuit? 

A     No.   He's  not  one  of  the  29  in  that  suit. 
MR.  MC  KAY:   No. 
Off  the  record? 
(Discussion  off  the  record.) 

Q     Do  you  ever  speak  about  Mr .  North  with  Secord? 







Nor  Hakim? 


Q     Have  you  ever  heard  of  a  man  named  Kevin  Katke? 

A     Yes.   That's  that  crazy  newspaper  article  put  out 
by  the  "Miami  Herald." 

Q     I  don't  keep  up  with  the  "Miami  Herald."   You'll 
have  to  inform  me. 

MR.  MC  KAY:   Oh,  you're  missing  something. 
THE  WITNESS:   We've  been  bombarded  by  all  sorts 
of  telephone  calls,  and  some  newspaper  reporter  was  badgering 
us  back  here  a  couple  of  months  ago  that  somehow  or  other 
a  gaggle  of  people  came  into  our  office  and  were  somehow 
trying  to  put  together  something  with  a  medical  supply 
operation  to  the  contras.   The  story  is  that  they  had 
figured  out  that  we  were  a  conduit  to  CIA,  and  therefore, 
they  were  going  to  give  us  this  proposal  to  evaluate,  and 
we  would  send  it  to  CIA  for  evaluation.   Well,  we  chased 
that  for  several  days  to  sort  it  out.   We  talked  to  the 
"Miami  Herald,"  and  they  never  got  the  story  straight.   They 
still  claim  that  somebody  came  to  our  office,  and  one  of 
the  guys  who  allegedly  was  involved  in  this  is  a  fellow 

E-rCKiM.  atranTHS.  inc 





by  the  name  of  Katke. 

Q     How  was  Katke  allegedly  involved? 

A     I  don't  know.   He  allegedly  came  to  our  office 
with  this  proposal,  as  I  could  unravel  it. 

Q     And  you're  unraveling  it  from  the  media? 

A     From  the  media  harassing  us. 

Q     Do  you  know  whether  Kevin  Katke  was  ever  at  your 

A     No.   I've  talked  to  the  people,  and  nobody  seems 
to  recall  Kevin  Katke.   I  certainly  didn't  meet  him. 

Q     Mr.  Jameson  works  for  you,  doesn't  he? 

A     Right. 

Q     What  would  you  describe  his  function  as? 

A     He's  a  vice  president  of  RAI .   He  is  also  a 
shareholder  in  TGS .   He's  an  analyst. 

Q     What's  his  function?  Analyst? 

A     Yes.   He  primarily  covers  the  Soviet  Union, 
Eastern  Europe  and  Western  Europe. 

Q     And  Mr.  Gillespie  also  works  with  you? 

A     Mr.  Gillespie  works  in  TGS. 

Q     Only? 

A     Yes.   I  think  maybe  at  some  point  in  the  past 





I  used  him  on  some  RAI  project,  but  his  primary  function  is 

Q     Have  you  ever  discussed  with  Mr.  Jameson  events 
in  Grenada? 

A     No.   Wait  a  minute.   Katke.   Maybe  that's  —  is 
this  guy  a  black?   There's  somebody  came  into  our  office, 
because  Jcimeson  had  the  FBI  in  to  talk  to  him  a  couple  of 
times  about  somebody  that  they  talked  to  from  Grenada.   I 
think  I  may  have  got  the  confused  here. 

Q     Let's  sort  it  out  gradually. 

A     Let's  back  off. 

Q     I  didn't  hear  what  you  just  told  me.   You  said 
that  somebody  came  in  your  office,  because  Jameson  what? 

A     Now  that  you're  talking  on  Grenada,  can  you 
help  me  clarify  this  thing. 

Q     Sure . 

A     Has  Katke  got  scHnething  to  do  with  Grenada? 

Q     He  does,  among  other  things.   I  don't  know 
whether  he  also  has  something  to  do  with  — 

A     Well,  then,  I've  had  a  slip  here. 

Q     Let's  back  up  and  start  in  again  from  a  different 

■.reocMi  nraiTEiis.  inc 





A  All  right.  If  Katke  is  an  individual  tied  to 
Grenada,  there  was  a  gentleman  by  the  name  of  Katke,  now 
that  you  mention  Grenada,  who  came  to  our  office,  and  he 
talked  with  Mr.  Jameson. 

Q     Yes. 

A     I  think  he  also  talked  with  Mr.  Gillespie. 

Q     All  right. 

A     Subsequent  to  that,  as  I  recall,  Mr.  Jameson 
talked  to  a  couple  of  FBI  people  about  the  visit  from 
Mr.  Katke,  the  gentleman  involved  in  Grenada. 

Q     I  gather  that  Mr.  Gillespie  or  Mr.  Jameson  told 
you  about  it. 

A     Yes.   He  told  me  that  the  FBI  was  coming  in  to 
talk  to  him  about,  you  know,  Grenada,  and  so  forth,  and 
this  fellow,  Katke.   But  that  happened  back  quite  a  while 
ago,  and  I  just  got  this  in  the  wrong  slot. 

Q     What  did  Katke  have  to  say  about  Grenada? 

A     I  have  no  idea.   Talk  to  Mr.  Jameson. 

Q     What  did  Jameson  tell  you  about  it? 

A     You  know,  basically,  it  was  a  guy  came  in  and 
talked  to  him  about  Grenada.   Grenada's  not  on  our  plate. 
I'm  not  interested  in  Grenada.   It's  not  an  oil  producer. 

:E-flD£«*l.  HIMinTtKS.   INC 




It  doesn't  have  any  oil,  doesn't  have  any  geological  traces 
of  oil,  and  I  didn't  fool  with  it.  And  Jamie  does  a  number 
of  hip  pocket  things  like  this. 

Q     Okay.   What  was  it?   Obviously,  in  a  small 
business  like  that,  when  the  FBI's  coming  in  to  talk  to  you 
about  contacts  you've  had,  and  you're  telling  your  boss 
why  the  FBI's  coming  in  to  visit  your  company,  you  give  him 
a  pretty  decent  explanation. 

A     No.   I  mean  — 

Q     What  did  Jameson  tell  you  about  this? 

A     Jameson  simply  told  me  that  he'd  had  a 
conversation  with  this  guy.   The  guy  had  been  in  to  talk 
to  him  about  Grenada.   He'd  sat  and  listened  to  him,  sent 
him  on  his  way.   Shortly  thereafter,  the  FBI  C2une  in  and 
wanted  to  know  what  they  had  talked  about,  and  that  was  it. 

Q     All  right.   And  what  did  Jcuneson  tell  you  that 
he  had  told  the  FBI? 

A     That's  what  I  just  told  you.   Whatever  subject 
matter  was  not  an  item  of  importemce  to  me.   I  wasn't 
concerned  with  Grenada.   I'm  not  interested  in  Grenada. 
I  didn't  ask  him  to  write  me  a  five-page  memorandum  on  it. 

Q     Did  he  write  you  anything  on  it? 





I  didn't  ask  him  to  write  me  anything  on  it. 
Did  he  write   you  anything  on  it? 
I    don't  believe   so. 


Q     Did  anybody  in  your  office  write  any  memo  to  the 
file  about  it? 

A  I  don't  think  so.  I  didn't  look  at  Mr.  Katke '  s 
name.  I  even  had  it  confused  with  something  else  when  you 
first  raised  it  with  me. 

Q     Your  office  --  you  had  a  visit  from  the  FBI  about 
some  prior  business  that  had  been  transacted  in  your  office, 
and  there  was  no  paper  created  about  it? 

A     We've  got  a  lot  of  things  to  do  and  creating 
paper  is  not  one  of  them. 

Q     What  was  it,  in  general,  that  Katke  had  in 
mind  when  he  came  to  your  office  and  spoke  with  Jameson? 

A  What  else  can  I  say  to  you?  I  don't  know.  I 
didn't  talk  to  the  man.  I  didn't  interrogate  Jameson  on 
what  he  talked  to  the  man  about. 

Q  And  you're  saying  that  Jameson  never  told  you 
what  his  conversation  Mqtfii  with  Katke? 

A  He  talked  about  Grenada,  but  I  didn't  pay  —  it 
was  not  a  matter  of  importance  to  me.   I  didn't  retain 






anything.   As  you've  just  seen,  I  had  the  guy  mixed  up  with 
somebody  else. 

Q     That's  different  than  forgetting  that  the  FBI 
came  in  there  talking  to  your  employees. 

A     No.   Jcimeson  talks  to  the  FBI  quite  frequently. 

Q     On  this  occasion,  the  FBI  arrived  to  speak  with 
Jameson;  right? 

A     Yes.   That's  my  recollection. 

Q     Katke  had  notified  the  FBI.   They  came  an  talked 
to  Jameson. 

A     That  I  don't  know.   I  don't  know  how  the  FBI  got 
onto  it.   Maybe  they  were  surveilling  Katke.   I  don't  know 
what  they  were  doing  with  him. 

Q     Did  you  discuss  with  Gillespie  what  Katke  was 
doing  in  the  office? 

A     Well,  my  recollection  is  that  Gillespie  said 
I  sat  in  while  Jaunie  talked  and  one  of  his  people  had  come 
in  through  the  door.   I  mean,  Jeimie's  always  talking  to 
people.   He  collects  people. 

Q     Mr.  Shackley,  if  you  really  didn't  talk  about 
this  with  your  employees ,  then  you'll  remember  not  talking 
about  it.   Would  it  refresh  your  recollection,  if  I 

-mtlM.  MMMTEIS.   INC 





suggested  that  Katke  was  there  talking  about  overthrowing 
the  government  of  Grenada? 

A     He  may  have  been,  but,  you  know,  really,  if  that 
is  of  that  much  interest  to  you,  you  ought  to  talk  to  these 
other  people.   I  didn't  sit  in  on  the  conversation.   I 
didn't  talk  to  the  man,  and  it  was  not  an  item  that  was  of 
interest  to  me. 

Q     When  did  you  first  meet  Michael  Ledeen? 

A     Michael  Ledeen?   I  met  him  after  I  left  the 
Agency,  maybe  1980,  maybe  1979.   Somewhere  in  there. 

Q     Let  me  ask  you  a  few  more  questions ' along  this 
Grenada  line. 

Have  you  ever  heard  of  Vista,  International? 

A     No,  I  don't  think  so. 

Q     A  company  headquartered  in  Florida. 

A     No.   That  doesn't  ring  any  bells  with  me. 

Q     Do  you  know  about  Mountel  —  M-o-u-n-t-e-1? 

A     There's  a  fellow  who  has  a  name  something  like 
that.   Is  this  guy  an  ex-Special  Forces  major  or  something 
like  that? 

Q     That  would  make  sense. 

A     He  is  somebody  that  is  known  to  Mr.  Gillespie. 





I  think  he  may  have  been  in  our  office.  My  recollection 
is,  he  may  have  been  in  our  office  one  time  after  he 
retired  from  Special  Forces. 

Q     What  does  Bob  Mountel  do  for  a  living? 

A     Z  have  no  idea. 

Q     Was  this  visit  to  your  office  also  in  relation 
to  Grenada? 

A     No,  not  that  I  recall.   He  was  looking  for  work 
for  some  corporate  group  that  he  was  putting  together,  of 
security  specialists,  if  it's  the  same  individual. 

Q     Do  you  know  of  a  man  named  Dick  Gadd? 

A     I've  only  seen  his  name.   I  do  not  personally 
know  him. 

Q     Do  you  know  of  him?  Have  you  heard  his  name 
before  it  came  out  in  hearings? 

A     No,  I  don't.   He's  on  this  list  here.   Richard 
Gadd,  but  I  dori't  know  him.   I've  never  heard  of  him. 

Q     Do  you  know  ofl 

A     It's  on  here.   Santa  Lucia  Airways.   That's  all 
I  know  about  it 

Q     You  had  never  heard  of  it  before  it  came  out  in 
the  hearings? 






A  No,    not    that   I    know  of. 

Q     Did  you  have  any  connection  with  Southern  Air 

A     Well,  I  know  Southern  Air  Transport  back  in  the 
days  when  I  was  in  the  government,  but  I  haven't  had  any 
contacts  with  Southern  Air  Transport  since  I  retired. 

Q     What  contact  did  you  have  with  them  when  you  were 
in  the  government? 

A     I  knew  that  they  did  work  for  the  government,  and 
I  think  that's  all  I  can  tell  you,  in  terms  of  my  obligations 
under  the  secrecy  agreement. 

Q     Your  obligations  under  the  secrecy  agreement  are 
not  implicated  in  any  way  by  testifying  under  oath. 

A     You're  not  supposed  to  discuss  the  sources  and 
methods.   I  mean,  if  you  say  to  me,  "Is  Mr,  ABC  a  spy?  Was 
he  in  penetration  of  the  Politburo."  or  something  like  that, 
you  know,  I'm  certainly  not  going  to  tell  you  that.   I'm 
going  to  go  back  to  the  Agency. 

Q     Let  me  ask  you,  since  you  have  been  retired,  have 
you  had  any  contacts  with  Southern  Air  Transport? 

A     No.   I  just  told  you  that.   I  have  not. 

Q     Or  with  any  of  the  people  that  work  there? 






I      A     Not  that  I  know  of. 

I      Q     Before  I  get  further  afield,  I  want  to  ask  about 
the  allegations.   I  think  they  must  be  in  the  lawsuit,  but  if 
they're  not,  they're  made  by  the  Christie  Institute  people 
on  the  radio  and  wherever,  about  activities  in  the  Bahamas 
known  to  the  Christie  Institute  as  the  "Fish  Farm." 

Are  you  aware  of  the  allegations  I'm  talking  about? 
MR.  MC  KAY:   I've  heard  Sheehan  make  it  on  the 
radio.   What  is  the  purpose  of  this,  and  why  are  you 
investigating  the  Christie  Institute's  allegations? 
MR.  HOLMES:   I'm  not. 

MR.  MC  KAY:   That's  exaetly  what  I'm  concerned 
about,  about  this  whole  matter.   It's  all  going  to  go  over  -- 
it's  not  going  to  go  over  to  them,  but  something's  going  to 
go  to  them.   Mr.  Sheehan,  as  he  tells  us  in  his  letter, 
tells  us  frequently  how  close  contact  he  has  with  the 
COTTonittee.   I  don't  know  what  purpose  you  have  going 
through.   If  it's  something  related  to  Iran  or  Nicaragua  — 
I  don't  think  the  Fish  Farm  is.   I  don't  know  what  the  Fish 
Farm  is.   But  Sheehan  has  talked  aUoout  it  on  the  radio. 
That's  something  he's  very  interested  in  pursuing.   I'm 
very  concerned  about  talking  about  whatever  the 






E-ftOMAL  «£PO«TE«S.    INC 

Fish  Farm  is  in  pursuit  of  his  allegations. 

MR.  HOLMES:   Our  mandate  is  broader  than  just 
Iran  and  Nicaragua.   It  includes  secret  military  assistance 
to  any  part  of  the  globe.   Also,  it  is  a  matter  of  concern 
il  to  us,  from  an  oversight  point  of  view,  whether  or  not 
11  paramilitary  operations,  such  as  I  understand  the  Fish  Farm 
allegation  is,  have  gone  on  and  are  going  on,  whether  or  not, 
it's  really  — 

MR.  MC  KAY:   Is  your  mandate  broader  than  what's  in 
the  committee  resolution? 

MR.  HOLMES:   No.   That's  the  resolution. 

MR.MC  KAY:   I  may  be  misreading  it,  because  I've 
misread  other  things  that  you  read  differently,  but  I 
don't  see  where  there's  this  broad  reference  to  military 
supplies  anywhere  in  the  world.   Is  that  what  you  said? 

(A  pause. ) 

MR.  HOLMES:   Well, "This  use  of  proceeds  from  any 
transaction  in  Nicaragua  or  any  other  foreign  country  to 
further  any  political  purpose  or  activity  within  the  United 
States  or  any  other  country  or  further  any  other  purpose  of 
any  nature  whatsoever." 

MR.  MC  KAY;   But  it's  proceeds  from  the  sale. 





I    Is   that   Iran? 

j  MR.  HOLMES:   As  I  understand  his  allegation  — 

MR.  MC  KAY:   I  don't  think  that's  his  allegation. 

MR.  HOLMES:   I'm  not  claiming  to  understand  his 
allegation,  but  I  listen  to  him  on  the  radio. 

MR.  MC  KAY:   I'll  let  Mr.  Shackley  answer  this  one, 
but  I'm  not  going  to  sit  here,  if  I  can  avoid  it,  and  go 
through  the  Christie  lawsuit,  because  that's  not  a  proper 
purpose  of  the  committee.   It's  an  outrageous  thing  that  he  . 
has  to  spend  money  defending  against.   It's  more  outrageous 
having  to  sit  here  answering  questi-ons  about  the  lawsuit . 

MR.  HOLMES:   I  can  understand  your  sentiments,  but 
I  am  sure  you  can  understand  that  the  committee  would  like 
to  hear  from  his  own  mouth  that  it  didn't  happen. 

MR,  MC  KAY:   I  don't  agree  with  your  interpretation 
of  this.   I'll  let  him  answer  this  question,  and  we'll  deal 
with  the  others  as  they  come  up. 

THE  WITNESS :   How  about  restating  the  question? 

Q     I  was  just  laying  the  foundation  in  that  question, 
and  that  is,  are  you  familiar  with  the  allegation  of  the 
existence  of  something  called  the  "Fish  Farm"  in  the 







A     No.   I  have  heard  tapes  or  excerpts  from  tapes 
by  the  Christie  Institute  making  some  reference  to  the 
Fish  Farm.   I  don't  know  what  the  Fish  Farm  is. 

Q     The  allegation,  as  I  understand  it,  is  that  there 
is  an  organization,  or  I  should  say,  a  group  of  individuals 
who  are  gathered  together  and  located  in  the  Caribbean,  who 
have,  as  one  of  their  purposes,  covert  paramilitary  activity 
directed  against  communist  interests  worldwide,  and  of  course, 
in  particular,  in  Central  America. 

MR.  MC  KAY:   That's  your  statement  of  the  allegation. 
What's  the  question? 

MR.  HOLMES:   That's  how  I  understand  it. 
Q     My  question  is,  are  you  familiar  or  have  you 
ever  heard  from  any  source  whatsoever  that  such  an 
organization  or  group  of  individuals  exists? 
A     Other  than  what? 

Q     Other  than  the  allegations  made  in  the  Christie 

MR.  MC  KAY:   It's  not  in  the  lawsuit. 

THE  WITNESS:   He's  made  this  on  tapes,  I  think. 






That's  the  only  —  in  his  various  —  whatever  you  want  to 
call  it. 

MR.  MC  KAY:   You  don't  need  to  go  through  that. 
Do  you  know  anything  about  this? 

THE  WITNESS:   I  don't  know  anything  about  the 
Fish  Farm. 


Q     Have  you  been  to  the  Bahamas? 

A     Yes,  I  have. 

Q     On  a  number  of  occasions? 

A     Since  —  how  about  defining  it? 

Q     Since,  say,  1980. 

A     Yes,  I  have  been  down  there  a  number  of  times. 

Q     Approximately  how  many  times? 

A  It  would  be  hard  for  me  to  guess.  I've  been  down 
there  on  business  relative  to  the  food  business,  I  told  you 
before,  importing  from  Argentina  to  the  Bahamas. 

Q     Is  that  your  only  business  in  the  Bahamas? 

A     No.   I  have  put  in  a  modular  storage  system  for 
the  Bahamas  Electric  Company. 

Q     Have  you  had  any  other  business  in  the  Bahamas? 

A     No.    I  have  been  negotiating  for  the  purchase  of 






an  island  down  there,  but  I  have  not  concluded  that. 

Q     Which  island  is  that? 

A     It's  an  island  caled  Little  San  Salvador. 

Q     From  whom  are  you  negotiating  the  purchase? 

A     From  the  current  owners  of  it,  which  is  a 
Bahamian  Corporation. 

Q     Who  are  the  people  involved  in  the  corporation? 

A     The  main  individual  is  a  Bahamian  lawyer  by  the 
name  of  Peter  Christie. 

Q     Is  he  a  principal  or  is  he  an  agent? 

A     He's  also  a  principal. 

Q     Who  are  the  other  principals? 

A     I  don't  know  that  I  have  all  the  names  with  me 
right  now,  because  I've  been  dealing  with  him.   He's  a 
fellow  by  the  name  of  --  I  think  one  of  the  owners  is  a 
fellow  by  the  name  of  de  San  Phalle. 

Q     For  whom  are  you  negotiating  the  purchase? 

A     For  Mr.  Dois. 

Q     What's  the  purpose  of  the  purchase? 

A     A  possible  site  for  a  residence  and/or  a 
corporate  headquarters. 

Q     Not  necessarily  relating  to  the  oil  business? 

:  FEMaAL  HlPOiniK.   inc 





A     I  don't  know  what  his  plans  are  beyond  what  I've 
]ust  told  you.   Residence  and/or  corporate  headquarters. 

Q     And  the  site  of  the  island? 

A     I've  forgotten  how  many  acres  it  is.   It's  a 
fairly  sizable  island. 

Q     Under  100  acres? 

A     I  think  it's  more  than  100  acres.   I  just  don't 
have  the  legal  description  of  the  island. 

Q     Have  you  ever  met  in  the  Bahamas  with  anybody  who 
has  been  associated  with,  past  or  present,  any  special 
operations  or  paramilitary  organizations? 

A     No,  I  have  not.   I  don't  recall  having  any 
meetings  there. 

Q     Have  you  ever  engaged  in  business  related  to 
counterinsurgency  programs?  . 

MR.  MC  KAY:   Is  this  arriving  from  funds  generated 
by  activities  in  Iran?   Again,  I  don't  see  what  it  has  to 
do  with  the  mandate'. 

This  is  Mr.  Sheehan,  pure  and  simple. 
MR.  HOLMES:    This  particular  question  relates 
to  Mr.  Ledeen. 

MR.  MC  KAY:   And  if  this  question  arises  from 






Mr.  Sheehan  — 

MR.  HOLMES:   I  never  heard  Sheehan  talking  anything 
about  Mr .  Ledeen . 

MR.  MC  KAY:   You're  talking  about  counter- 
insurgency.   The  complaint  is  full  of  30  years  of  counter- 
insurgency.   That's  what  the  bulk  of  the  Christie  suit  is 

MR.  HOLMES:   Let's  start  with  Mr.  Ledeen  again. 

Q     You  know  Mr.  Ledeen. 

A     Right . 

Q     You've  met  him  since  he  retired. 

A     Right. 

Q     Have  you  and  Mr.  Ledeen  ever  engaged  in  business 
together,  discussions  of  business? 

A     Yes,  we  have. 

Q     Would  you  detail  those  discussions,  please, 
chronologically . 

A     I'd  say,  back  in  1980,  we  put  on  sort  of  a 
war  game-type  exercise  in  Italy. 

Q     For  whom  did  you  put  on  the  exercise? 

A     For  one  of  the  Italian  security  services. 

t-ftMMM.  «tM»TUS.  INC 





Q     Which  one? 

A     I  think  it  was  the  military  service. 

Q     There ' s  an  acronym? 

A     I  think  it's  SISME.   It's  the  Italian  Military 

Q     You  were  paid  for  that  activity? 

A     Yes,  I  was  paid  for  that  activity  by  Mr.  Ledeen. 

Q     Was  it  a  contract  that  he  had  with  the  military 
service  that  you  were  subcontracting  on  or  what? 

A     I  gave  a  series  of  lectures  based  on  my  book. 

MR.  WOODCOCK:   That  book  is  "The  Third  Option"? 
THE  WITNESS:   Right. 

Q     Were  you  or  Mr.  Ledeen  seeking  further  business 
with  the  Italian  military  service? 

A     I  was  not. 

Q     Was  Mr.  Ledeen? 

A     I  think  Mr.  Ledeen  had  other  proposals  for 
war  game  type  exercises  pending  that  he  had  either  put 
proposals  forth  on  or  had  proposals  pending  or  was  thinking 
about  putting  proposals  forward. 

Q     You  had  discussed  those  proposals  with  him? 






A     No.   I  knew  he  was  involved  in  them  and  was 
putting  proposals  together  with  other  people. 

Q     Had  you  ever  discussed  with  him  or  any  of  these 
other  people  the  possiblity  that  you  could  provide  equipment 
for  any  activity  that  he  later  was  going  to  get  a  contract 
to  you? 

A     NO. 

Q     Have  you  ever  provided  that  kind  of  equipment? 
A     I  have  not. 

Q     Would  you  be  in  a  position  to  provide,  what  I 
hestitate  to  call  "counterinsurgency"  equipment? 

MR.  MC  KAY:   Do  you  know  what  that  means? 
THE  WITNESS:   You'd  have  to  give  me  a  definition 
of  what  you  are  talking  about,  in  terms  of  counter- 
insurgency  equipment. 

Would  I  be  in  a  position  to  provide  counter- 
insurgency  equipment?   I  don't  know  what  you  mean. 

MR.  MC  KAY:   I'll  also  object  on  the  grounds  of 
relevancy.   I  don't  see  what  difference  it  makes  if  he  could 
or  could  not  do  it,  if  he  hasn't  done  it. 
Q     Did  you  provide  equipment  to  the  so-called 

n-noauu.  tuomtn.  inc 





"war  game  exercise"? 

A     I  did  not. 

Q     Who  did? 

A     There  wasn't  any  equipment. 

Q     What  was  the  exercise? 

A     The  exercise  was  a  series  of  lectures,  and  what, 
in  essence,  is  a  command  post  exercise,  where  you're  exchanging 
paper  to  create  scenarios. 

Q     So  there  was  no  field  activity  at  all? 

A     None.   It's  like  a  war  game  exercise.   You  have 
participants  on  various  teams.   You  create  scenarios.   People 

Q     Since  that  time,  have  you  had  any  contacts  with 
Mr.  Ledeen? 

A     Yes.   I've  stayed  in  regular  contact  with 
Mr.  Ledeen.   I've  tried  to  do  some  oil  business  with  him. 

Q     Is  that  the  only  business  you've  discussed  with 
him  since  then? 

A     That's  the  only  business  I  can  think  of.   He  also 
was  in  touch  with  Mr.  Jameson.   He  and  Mr.  Jameson  were 
pursuing  some  oil  concessions,  separate  from  what  I  was 







Q     When  you  said  he  was  in  touch  with  Mr.  Jamesen, 
you  mean,  you  were  permitting  Mr.  Jamesen  to  operate  as  a 
free  agent  outside  of  the  corporation? 

A     Yes.  Mr.   Jameson  has  money  of  his  own.   He's 
made  some  investments,  and  he  was  pursuing  some  activity 
related  to  those  investments. 

Q     Does  the  corporation  pass  on  those  kinds  of 
opportunities  when  they  arise  and  put  a  letter  of  "no 
conflict"  in  the  file  or  something? 

A  No.  Jamie  might  mention  it  to  me  and  say  he's 
doing  this.  Am  I  interested  in  it?  If  I  say  no,  then  he 
goes  on  and  pursues  it. 

Q     No  memo  to  cover  it? 

A     No. 

Q     So  what  did  Mr.  j2uneson  tell  you  with  regard  to 
this  contact  with  Ledeen? 

A     They  were  working  on  some  oil  activities,  and  I 
thought  it  was  a  nonevent  and  didn't  want  to  waste  my  time 
with  it,  and  if  he  wanted  to  pursue  it  with  Mr.  Ledeen,  that 
was  fine. 

Q     Where  were  these  oil  concessions? 

A     I  think  they  were  dealing  with  a  company  in 





Q     That's  where  the  company  was;  where  were  the 

A     I  think  Mr.  Jameson  has  a  piece  of  a  concession 
or  had  a  piece  of  a  concession  in,  I  think  it  was  either 
Honduras  or  Guatemala. 

Q     Now  the  oil  business  that  you  discussed  with 
Ledeen,  was  that  corporate  business? 

A     Yes,  that  was  corporate  business.   I  was 
interested  in  pursuing  at  one  time  an  opening  to  Nigeria. 
Mr,  Ledeen  and  I  thought  that  because  we  saw  Portugal  was 
buying  from  Nigeria  that  that  might  be  a  possibility.   There 
have  been  several  coups  in  Nigeria,  and  I've  forgotten  which 
coup  it  was  after,  when  everybody's  lines  of  communications 
were  broken,  and  I  was  trying  to  get  into  the  Nigerian 

Mr.  Ledeen  introduced  me  to  a  leading  official 
in  the  Portuguese  Oil  Company. 

Q     Will  there  be  references  to  that  in  the  documents 
you  provided? 

A     Yes,  I  think  there's  correspondence  there. 

Q     How  would  it  be  filed?   Under  "Ledeen"? 






A     No,  I  think  it's  probably  under  —  it's  probably 
in  the  folder  titled  "Petrogal  {Pedro  Perez  de  Miranda)." 

Q     Is  that  the  person  you  were  introduced  to? 

A     Yes. 

(A  pause. ) 

Q     Have  we  completely  catalogued  your  discussions 
with  Mr .  Ledeen? 

A     Yes,  as  far  as  I  can  think  of  it.   There's  oil 
with  me,  some  oil  deals  that  he  worked  on  with  Jamie.   The 
oil  concession  area. 

Q     For  whom  was  Ledeen  dealing  in  these  oil  deals? 

A     As  far  as  I  could  see,  he  was  dealing  for  himself. 
He  was  trying  to  be  a  broker  and  put  a  deal  together  and 
get  a  percentage  of  it,  of  the  deal. 

Q     Does  he  have  any  expertise  in  the  oil  industry? 

A     No,  but  that  doesn't  mean  anything.   Guys  try  this 
all  the  time.  During  tight  periods  in  the  market  people  are 
around  trying  to  put  these  together  all  the  time,  based  on 
the  fact  that  they  know  somebody. 

Q     So  he's  daisy  chaining  on  daisy  chains. 

A     Right.   That's  why,  a  lot  of  these,  I  won't 
fool  with.   That's  why  I'm  not  interested  in  some  of  them. 

■-fCDUAi  ntPoarcas  inc 





Q     Apart  from  those  arrangements,  has  Ledeen  ever 
collaborated  with  you  in  the  risk  analysis  business? 

A     I  think  maybe  on  a  couple  of  occasions  he's 
written  some  papers  for  me. 
Q     What  about? 

A     Probably  about  the  Italian  political  scene. 
Q     As  it  related  to  oil? 

A     No,  just  in  terms  of  —  can  I  look  through  the 
file  here?   It  may  refresh  my  memory  on  that,  and  I'm  getting 
tired,  and  you're  asking  me  a  lot  of  different  questions. 
MR.    MC  KAY:   Off  the  record. 
(Discussion  off  the  record.) 

THE  WITNESS:   He  wrote  a  paper  for  me  on  the 
Fanfani  government.   That  was  in  December  of  '82. 

Let  me  just  flip  through  this  real  quickly,  and 
I'll  see. 

(A  pause. ) 

Mr.  Ledeen  did  introduce  -  e  to  something  called 
The  Young  Presidents  Organization.   These  are  CEOs  of 
fast-growing  companies.   The  criteria  was,  to  be  a  member  of 
this  organization,  you  had  to  have  gross  receipts  of 
something  like  $20  million  or  $25  million  a  year,  be  under 

lE-rCDCUU.  IICK)»TE>S.   iNC 




age  such-and-such,  and  so  forth. 

They  put  together  seminars,  trips  and  travel,  and 
so  forth,  and  Ledeen  introduced  me  to  a  couple  of  these 
people.   They  wanted  me  to  participate  with  them  in  a 
trip  either  this  year  or  next  year  —  no,  the  fall  of  '87. 
I  told  them  I  can't  do  it. 

Q     Other  contacts  with  Ledeen  from  '82  forward? 
A     You  know,  I'm  in  —  we  discussed  the  business, 
you  know,  and  I  tried  to  describe  to  you  what  the  business 
is,  and  I  am  in  touch  with  him  on  a  social  basis.   That's 
what  occurred  on  this  Iran  situation.   I  was  having  a 
periodic  lunch  with  him  in  May  of  1985,  when  he  asked  me 
at  lunch  —  he  probably  said  to  me,  "You  spend  a  lot  of 
time  covering  the  Middle  East.   Have  you  got  any  bright 
ideas  on  how  we  can  get  the  hostages  out?" 

I  said,  "No,  I  don't  have  any  bright  ideas." 

And  then,  after  a  while,  I  said,  "You  know,  but 
back  last  year,  I  met  these  people,  and  I  had  an  experience. 
I  turned  in  a  paper,  and  I  heard  from  the  State  Department, 
they  weren't  interested." 

And  he  said,  "Gee,  that's  interesting.   You  know. 


E-rmiM.  icnwrtiis.  inc 




could  you  give  me  an  update  on  that,  and  could  I  get  the 

original  paper?   I'll  turn  it  in  to  somebody  in  the  NSC." 


!       Q     Is  that  the  first  time  he'd  ever  mentioned  that 
paper  to  Ledeen? 

A     Yes. 

Q     Is  that  the  first  time  you'd  ever  mentioned  the 
events  of  November  20,  '84,  to  Ledeen? 

A     To  the  best  of  my  knowledge,  yes. 

Q     Why  is  that?  Why  hadn't  you  mentioned  it  to 
him  before? 

A     Why  should  I  mention  it  to  him? 

Q     He's  at  the  NSC.   He's  supposed  to  be  working 
on  counterterrorism. 

A     No.   You  mean  --  I  keep  my  own  counsel.   I  don't 
run  around  and  tell  everybody  that  I  meet  for  lunch  everything 
I'm  doing.   Why?   That's  not  my  personality.   Maybe  it's 
yours,  but  that's  not  mine. 

Q     In  any  event,  you  didn't  tell  him? 

A     No. 

Q     Who  had  you  told  since  November  of  '84  about  that 

A     I  don't  recall  telling  anybody  except  the 






people  in  my  office. 
(A  pause.) 

You  seem  to  think  I  should  be  out  there 
advertising  this  thing.   I  had  a  meeting;  I  reported  it. 
Bangl   Finished  I 

Q     I  don't  want  you  to  read  into  my  questions. 
I  just  want  to  know  what  you  did. 

Q     On  your  topic,  do  you  know  if  Mr.  Ledeen  during 
the  period  '84  to  the  present  was  in  the  employ  of  any 
government  or  any  government  agency,  U.S.  or  otherwise? 

A     Since  '84,  the  only  thing  that  I  know  of  is,  he 
has  said  that  he  was  an  adviser  to  the  National  Security 
Counsel . 

Q     Do  you  know  if  he  was  employed  by  any  other 
government  in  any  capacity? 

A     No,  not  that  I  know  of. 

Q     Do  you  know  if  he  was  an  adviser  or  consultant, 
either  to  Mr .  Schwimmer  or  to  Mr .  Deraudy? 

A     Those  names  have  never  come  up  in  conversations, 
between  us.   I  have  no  knowledge  of  that. 

:c-rfoaw.  MPO«TC>s.  inc. 




Q     Do  you  know  if  he  was  a  consultant  to  any  Israeli 

A     I  never  heard  him  mention  anything  about  that. 
Q     Or  person? 

A     No,  I  never  heard  him  mention  anything  like  that. 
MR.  SABA:   That's  all  on  that  line. 
MR.  HOLMES:   I  think  this  would  probably  be  a 
good  enough  time  to  break. 

Why  don't  we  say  9:00  o'clock  on  Monday? 
MR.  MC  KAY:   I've  got  a  meeting  I  really  need  to 
attend  for  an  hour,  starting  at  8:30,  so  we  could  be  here 
by  10:00. 

It's  something  that's  been  set  a  long  time. 
I  didn't  know  you  were  talking  about  starting  that  early. 
(Discussion  off  the  record.) 
(Whereupon,  at  4:45  p.m.,  the  taking  of  the 
deposition  was  adjourned,  to  reconvene  at  10:00  a.m.,  on 
Monday,  September  21,  1987.) 








QQEK  MTt        '        ng      ^^      mpgs      J^y 


Washington,  D.C. 
Monday,  September  21,  1987 




Ace-Federal  Reporters,  Lnc. 

Sitnotype  Reponm 
444  North  Capitol  Street 

\^^)  J*/- jAAJ  unaei  provisions  ol  E  0  12356 

Nitionwidt  Qovwa^  by  K  Johnson,  National  Secunty  Council 


8;^  736        207 








Washington,  D.C. 

Monday,  September  21,  1987 
The  second  day  of  the  deposition  of 
THEODORE  G.  SHACKLEY,  called  for  examination  at  the 
offices  of  taie  Senate  Select  Coqgnittee,  Suite  901,  the 
Hart  Senate  Office  Building,  at  10:15  a.m.,  before 
LOUIS  P.  WAIBEL,  a  Notary  Public  within  and  for  the 
District  of  Columbia,  when  were  present  on  behalf  of  the 
respective  parties: 


Associate  Counsel 


Associate  Counsel 


Associate  Counsel 

United  States  Senate 
Select  Committee  on  Secret 
Military  Assistance  to  Iran 
and  the  Niceuraguan  Opposition. 

..eciassified/Released  on^i±!!fi* 
■met  provisions  o1  E  0  12356 
iohnson.  National  Seeuiity  Council 

(■naOM.  IfMITCM.  INC. 





JOSEPH  P.  SABA,  Esq. 
Associate  Majority  Counsel 

United  States  House  of 

Representatives  Select 

Connnittee   to  Investigate 

Covert  Arms  Transactions  with  Iran 

JACK  MC  KAY,  Esq. 
Shaw  Pittman  Potts  &  Trowbridge 
2300  N  Street,  N,W, 
Washington,  D.C. 

On  behalf  of  the  deponent 

ci-nMiM.  upwras.  inc. 







Theodore  G.  Shackley 
by  Mr .  Holmes 

By  Mr.  Woodcock 

By  Mr .  Monsky 




452,  461,  473 

Exhibit  8 
Exhibit  9 
Exhibit  10 
Exhibit  11 
Exhibit  12 
Exhibit  13 






Whereupon , 

resumed  the  stand  and,  having  been  previously  duly  sworn,  was 
examined  and  testified  further  as  follows: 

Q     Mr.  Shackley,  when  we  left  off  in  the  last  session 
of  this  deposition,  we  had  before  us  these  two  boxes  of 
exhibits,  which  became  Exhibit  6  and  Exhibit  7,  from  RAI  and 
TGS,  respectively. 

Have  you  ever  been  associated  with  any  other 
corporations  other  than  these  two? 

MR.  MC  KAY:   Let  me  just  ask,  would  you  define  what 
you  mean  by  "associated"?  I  mean,  he  has  perhaps  been  an 
employee  or  a  consultant  or  \^iatever. 

MR.  HOLMES:   Sure. 

Q     I  mean,  in  this  question,  to  be  as  broad  as 
possible.   In  other  words,  em  employee,  agent,  director, 
officer,  a  person  with  substantial  control  over  the  affairs  ' 
of  or  representative  of  any  corporation. 



208  . 

A     I  think  I  told  you  the  last  time  we  talked  that  I 
had  done  some  work  for  a  corporation  called  API  Distributors, 
and  we  discussed  that  rather  thoroughly. 

Q     So  there  was  API .   Any  others? 

A     There  was  IRT,  which  was  a  company  that  was  —  and 

Q     Let's  just  get  the  list  first.   Then  we'll  go  down 
and  explore  them,  if  necessary. 

Are  there  any  other  corporations  that  would  belong 
on  this  list? 

A     No.   Then  I  told  you  the  other  day  that  I  did  some 
consulting  work  for  the  sequence  of  Hakim,  Triangle  Associates 
and  Stanford  Technology.   And  for  a  short  period  of  time,  I 
did  some  consulting  work  for  EATSCO. 

Q  Any  others?     We  talked  a  little  bit  eibout 

Trans-World,      and  that's  also  a  consulting  business. 

A  We  talked  eUxiut  Trans-World   and  its  various  entities. 

Q  Are   there  others? 

A  You  know,    I   can't  think  of   — 

Q  Was   —  j 

A     Again,  go  back  to  the  basic  question.   I'm  not  a 
director  or  haven't  been  a  director  or  a  stockholder,  and  I  i 

ci-ftsoM.  icraams.  inc 





have  done  work  for  these  companies  as  a  consultant.   I'm 
just  trying  to  think  who  else  I  might  have  done  consulting 
work  for,  but  I  don't  think  that  that's  the  scope  of  your 
question,  is  it? 

Q     If  you  were  a  consultant  for  a  corporation  on  a 
long-term  or  substantial  basis,  that  would  be  within  the 
scope  of  the  question. 

MR.  MC  KAY:   We  may  have  given  you  more  than  you 
asked  for.   I  would  say  for  the  record,  I  don't  want  the 
record  to  imply,  because  he  listed  these,  that  he's  been 
consulting  for  them  on  a  long-term  basis. 

MR.  HOLMES:   Sure. 

THE  WITNESS:   I  did  some  consulting  work  for  a 
compeuiy  called  Bernstein  Brothers.   I'm  having  trouble  now 
trying  to  think  who  all  the  various  people  were  that  I  did 
consulting  work  for,  but  I  think  that's  as  close  as  I  can 
recall  at  this  particular  point.  There  might  have  been  some 
oth«r  companies. 

Q     Before  we  go  on  to  discuss  these  corporations, 
I  would  like  to  ask  you  the  same  question  again  with  regard 
to  any  other  entity  or  association.   In  other  words,  a  group 





of  people  who  are  not  necessarily  incorporation,  to  include 
partnerships,  joint  ventures,  associations,  foreign 
corporations,  foreign  businesses  that  are  not  incorporated, 
in  the  sense  that  we  use  the  term  in  the  United  States. 

A     I  think,  you  know,  on  the  TGS  and  the  Kuwait 
project,  we  do  have  a  joint  venture  for  one  of  the  warehouse 
projects  we  did  in  Kuwait. 

Q     And  the  name  of  the  joint  venture  is? 

A  I   can't    think  of   it.      It's   in  the   file.      For  the 

moment,   you  know,    I   got  a  blank. 

Q     We'll  call  it  the  Kuwaiti  Joint  Venture. 

A     Yes. 

Q     And  it's  in  the  file? 

A     The  cc^npany  is  a  conduit  and  foundation. 

Q     All  right.   Let  me  get  it  straight.   Is  that  your 
joint  venturer? 

A     Yes. 

Q     And  is  that  also  the  name  of  the  joint  venture 

A     No.   The  joint  venture  is  TGS  International/Condui! 
and  Foundation  Corporation. 

Q     All  right.  Then  let's  continue  with  this  list.   \ 


:c-nM«At.  MfotTus.  inc 





A     At  the  moment,  I  just  can't  think  of  any  other  that 
would  be  a  joint  venture. 

Q     Remember,  this  includes  things  other  than  joint 
ventures  —  associations,  partnerships,  and  even  governmental 

A     The  only  government  contracts  I  have  had  is  with 

TGS  International  and  has  been  the  U.S.  government  contract, 

foreign  military  sales,  contracts  with  Kuwait. 

If  you  let  me  look  at  the  files  in  the  TGS,  I -think 

there's  a  rundown  there,  because  we  had  the  first  construction 

warehouse  project  that  we  did  in  Kuwait  was  with  Lockheed. 

And  I  forgot  whether  we  were  a  subcontractor.   I  think  we 

were  a  subcontractor  to  Lockheed. 

MR .  HOLMES :   You ' re  certainly  welcome  to  look  at 

the  files  any  time  you  want.   I  just  rushed  past  it,  because 

I  wasn't  particularly  interested  in  the  Kuwait  project. 

THE  WITNESS:   I'm  just  trying  to  go  down  this  list. 

I  can't  think  of  any  other  joint  ventures  that  we  had.   I 

certainly  had  no  partnerships. 

BY  MR.  HOLMES:  ' 

Q     All  right.   Let's  return  to  the  two  lists  that  we 


have  created. 


ei-naoM.  looaTtiis.  inc 




We  discussed  API. 

A     Yes. 

Q     And  we  have  discussed  SSI.   We  discussed  all  of 
your  associations  with  Triangle  Associates. 

A     Yes,  as  far  as  I  know,  we  have  gone  through  that. 

A     And  also  with  STC  —  Stanford  Technology 

A     Yes.   Based  on  what  we  covered  the  other  day. 

Q     Based  on  what  we  covered  the  other  day  and  also 
with  STGI? 

A     I  don ' t  think  I  ever  did  any  work  for  STGI .   I 
was  very  careful  to  tell  you  that  all  of  my  correspondence, 
as  far  as  I  am  concerned,  was  with  Stanford  Technology 

Q     Very  well .   We  have  discussed  at  least  some  of  your 
dealings  with  Trans-World  Oil,  so  we'll  check  that  off  for 
the  moment.   That  leaves  IRI. 

What  association  have  you  had  with  IRT? 

A     That  was  a  company  that  Mr.  Clines  had  that  was 
essentially  an  international  trading  company.   I  think  I 
talked  with  you  before.   It  was  a  company  that  we  tried  to 
do  international  buying  and  selling.   It  was  primarily 
during  that  period  of  time,  dealing  with  the  sales  of       ■ 

cf-ncfUL  MraiTus.  inc 





agricultural  canned  products  and  so  forth  to  the  Bahamas. 

Q     The  name   was  International  Trade  and  Research? 

A     Right. 

Q     Did  you  ever  have  euiy  equity  position  in  that 

A     No,  I  did  not. 

Q     You  were  strictly  a  consultant? 

A     Right. 

Q     You  never  participated  in  any  funding  of  the 
ccopany  in  any  way,  shape  or  form? 

A     No.  And  I  was  not  paid  by  them,  except  for 
expenses . 

Q     Let's  move  down  to  EATSCO.   This  is  Egyptian 
American  Transportation  Company;  is  that  correct? 

A     Egyptian  American  Transport  Compemy,  I  think  it 
was,  but  it  may  be  Transportation.   I  don't  remember  the 
full  title. 

Q     And  when  were  you  first  associated  with  that 

A     I  did  some  consulting  work  with  them  for  about 
three  months.   Three  or  four  months,  as  I  recall. 

Q     Would  that  be  reflected  in  records  that  you 





provided  us? 

A     I  don't  think  so,  because  if  I'm  not  mistaken,  I 
think  that  was  probably  1980,  maybe  '81.   I  don't  remember 
the  exact  period.   It  was  either  '80  or  '81,  and  it  was  about 
a  three  or  four-month  period  there  that  we  had  turned  out 
some  papers  for  them. 

Q     What  was  the  nature  of  your  consultancy? 

A     They  were  interested  in  expanding  their  business 
in  several  areas .    They  wanted  general  papers  on  the 
political/economic  climate  in  these  countries,  as  I  recall. 

Q     Which  countries  did  you  examine  for  them? 

A     You  know,  that's  been  a  long  time  ago.   I  don't 
remember,  specifically.   That's  seven  years  ago.   That's  a 
long  time  ago.   I'm  having  trouble  thinking  what  countries 
they  were.   I  think  one  of  them  may  have  been  Pakistan. 

Q     Did  you  produce  papers  for  them? 

A     Yes. 

Q     What  was  the  approximate  total  of  payment  you 
received  from  them? 

A     Probably  somewhere  in  the  neighborhood  of  about 
$8000  was  the  total.   I'd  say  about  three  or  four  months  we 

did  work  for  them. 

et-nooAL  DtKWTus.  inc 





Q     Would  that  be  a  net  or  gross  figure,  including 

A     I  didn't  do  any  travel  for  them.   It  was  all  turning 
out  papers. 

Q     And  for  whom  did  you  work,  specifically?  What 
individuals  did  you  report  to? 

A     A  the  particular  time  period,  the  two  people  that 
I  dealt  with  were  Mr.  Salim  emd  Mr.  Clines. 

Q     Had  you  ever  met  Salim  before? 

A     Before  Z  started  doing  these  papers  for  him? 

Q     Yes. 

A     Yes,  I  think  I  had  met  him  prior  to  that,  yes,  but 
I  don't  remember  exactly  when.   Maybe  early  in  1980. 

Q     How  did  you  meet  hiffl? 

A     I  met  hia  through  Mr.  Clines. 

Q     Did  you  have  anybody  else  help  you  do  the  work? 

A     Well,  whatever  people  were  employed  with  me  at  the 
time  were  helping  to  turn  out  the  papers.   I  didn't  turn 
out  every  paper  myself. 

Q     Who  were  they?  j 

A     I  can't  tell  you  who  worked  on  the  papers.   I've   ; 
having  trouble  even  remembering  the  papers,  let  alone  the  —  j 





Q     So  it  would  have  been  just  your  staff  people?   You 
didn't  go  outside  to  an  outside  consultant? 

A     I  don't  recall  going  to  an  outside  consultant  for 
anything  that  we  were  doing  for  them,  no.   I  don't  recall 

Q  I  gather  you  had  sane  discussions  or  one  or  more 
discussions  with  Salim  and  Clines  about  why  you  were  being 
asked  to  do  this  work,  and  it  had  something  to  do  with  the 
expansion  of  EATSCO? 

A  They  were  interested  in  other  parts  of  the  world. 
I  had  the  impression  they  were  interested  in  expanding  into 
other  parts  of  the  world. 

Q  What  is  it  that  they  were  expanding? 

A     My  impression  was  that  they  were  in  the 
transportation  business  and  that  they  were  looking  at  the 
possibility  of  expanding  their  trauisportation  business. 

Q     Have  you  ever  dealt  with  an  R.  G.  Hobleman  Company? 

A     Yes. 

Q     What  has  been  the  nature  of  your  dealings  with 

Hobleman  from  the  beginning? 

A     Hobleman  was,  essentially,  a  freight  forwarding 

company.   I  used  them  to  arrange  shipping  from  places  like 

iCI-rtOCMl.  ■IMMTUS.  I  IK 





Argentina  to  the  Bahamas,  when  food  containers  —  containers 
of  corned  beef,  for  exaimple,  were  purchased.   The  freight 
forwarding,  we  used  R.  G.  Hobleman  to  arrange  that. 

Q     When  was  the  first  time  that  you  had  any  dealings 
with  R.  G.  Hobleman  people? 

A     It's  hard  to  say.   Possibly  sometime  in  1979,  after 
I  retired  and  started  working  on  some  of  these.   Maybe  1980. 
I  can't  be  more  precise  than  that. 

Q     In  any  event,  it  was  during  your  association  with 
Clines  and  his  various  compemies? 

A     Right. 

Q     API,  IRT  and  SSI? 

A     Yes.   My  main  recollection  of  R.  G.  Hobleman  is 
in  the  context  of  moving  food  products,  and  that  would  have 
been  with  IRT.   And  there  were  such  things  like  corned  beef 
from  Argentina,  com  from  Canada  and  thing*  like  that. 

Q     How  did  you  first  make  contact  with  R.  G.  Hobleman? 

A     I  don't  know.   I  met  the  principal  officer  in 
that  company,  a  fellow  by  the  name  of  Gragga.   I  think  it's 
G-r-a-g-g-a.   That's  the  best  I  can  do  for  you.   That's 
phonetically.  ! 

Q     All  right.   How  did  you  first  make  any  contact     [ 

<t'«naM.  KPoima.  inc. 





with  any  R.  G.  Hobleman  people? 

A     I  think  my  first  contact  was  with  Mr.  Gragga.   I 
think  I  met  him  in  a  social  context  through  Mr.  Jameson. 

Q     And  that  would  have  been  in  the  period  immediately  • 
after  your  retirement  sometime,  or  was  it  before  your 

A     I  don't  recall.   My  first  memory  that  I  can  recall  : 
is  after  I  retired. 

Q     Had  R.  G.  Hobleman  or  any  people  affiliated  with 
them  done  work  for  the  CIA,  to  your  knowledge? 

A     Not  that  I  know  of. 

Q     And  to  clarify  the  record,  they  could  have  done 
work,  and  you  didn't  know  about  it? 

A     Right . 

Q     In  a  compartmentalization  type  situation? 

A     Right. 

Q     Had  they  every  done  work  for  Clines  prior  to  the 
tina  that  you  met  Mr.  Gragga  in  a  social  situation? 

A     I  have  no  way  of  knowing  that.   I  mean,  I  have  no  , 


way  of  knowing  that.  ' 

Q     They  became  the  freight  forwarder  implemeter  for 
the  EATSCO  operation;  correct? 

Ct-nMMt.  MMtTUI.  INC 




A     Yes.   I  know  they  did  a  lot  of  work  together,  but 
exactly  what  the  nature  of  their  relationship  was,  and  so 
forth,  I'm  not  familiar  with  that. 

Q     What  I'm  getting  at  is,  did  you  know  Gragga  first,  , 
or  did  Clines  know  Gragga  first? 

A     That  I  don't  know.   I  told  you  I  met  him  —  the 
best  recollection  that  I  have  is,  I  met  him  through  Donald 
Jameson .  - 

Q     But  your  early  association  with  him  didn't  discover' 
the  fact  that  he  was  a  longtime  associate  or  business 
associate  or  even  a  person  that  Clines  knew? 

A     No.   As  I  say,  my  memory  of  his  is,  I  met  him 
through  Jameson,  and  that's  all  I  can  remember  about  the  guy. 

Q     Had  he  ever  done  any  work  with  Jauneson? 

A     No,  I  don't  know  where  they  met.   Let's  see.   That's 

a  long  time  ago.   I'm  having  trouble  dredging  this  out  of  my 

memory.   I  just  can't  remember  where  they  know  each  other 

fro*  or  even  if  I  knew. 

Q     All  right.  5 

Did  you  later  become  feuniliar  with  or  hear  of  the  j 

business  name  of  Air  Freight  International? 

A     I'm  not  familiar  with  Air  Freight  International. 

.  OMMITOn.  INC. 





Q     They  were  a  subsidiary  of  R.  G.  Hobleman  in 
association  with  EATSCO. 

That  doesn't  help  you  at  all? 

A     No.   In  that  period  of  time,  I  was  not  involved 
in  air  freighting  anything,  so  had  no  reason  to  be  involved 
with  them,  or  it's  not  a  name  that  rings  any  bells  with  me. 

Q     Your  consultancy  with  EATSCO  didn't  touch  on  air    • 
freight  possibilities? 

A     No.   All  it  consisted  of  was  doing  basically  ' 
papers  for  them. 

Q     Do  you  have  access  to  those  papers  now? 

A     I  don't  know.   I  haven't  gone  back.   Maybe  I  do. 
I  don ' t  know . 

Q     If  you  do,  could  you  produce  those  at  a  later  time 
to  the  committee? 

A     Well  ~ 

MR.  MC  KAY:   We  are  already  back  5-1/2  years.   We   I 
ar«  now  talking  about  going  back  seven  years.   I  have  serious 
trouble  knowing  what  any  of  this  has  to  do  with  the  committee', 
mandate .  I 

If  you  want  to  subpoena  documents  going  back 
another  two  years,  obviously,  we'll  have  to  deal  with  it,  but 





:i-maM.  MMwmt  inc. 



why  don't  we  take  this  one  down, and  without  my  responding  to 
it,  see  what  else  you're  asking  for. 
MR.  HOLMES:   All  right. 

Q     After  this  consultancy  with  EATSCO,  you  had  no 
further  dealings  with  Salim? 

A     No.   Basically,  I  don't  recall  that  even.   I'm 
having  a  little  trouble  putting  this  into  perspective,  you 
know,  the  time  sequence.   I  met  Salim's  brother,  who  is  .an 
oil  geologist,  but  I  can't  remember  when  that  was.   I  had 
some  correspondence  with  him  for  looking  at  oil  concessions. 

Q     Would  those  be  the  oil  concessions  that  we 
previously  discussed,  the  same  concessions? 

A     No.   The  same  concept.   The  same  concept.   But 
nothing  came  of  that.   He  was  already  working  for  a  couple  of 
other  oil  companies.   I'm  trying  to  think  of  them.   I  can't 
think  of  anything  else  at  the  moment. 

Q     Did  you  ever  attend  any  meetings  with  any  other 
p«opl«  at  all,  in  which  EATSCO  business  opportunities  were 

A     No,  not  that  I  recall. 

Q     Did  you  ever  discuss  the  business  of  transporting 




military  materiel  from  the  United  States  to  Egypt  with  Ed 

A     No,  I  don't  recall  having  any  conversations  with 
him  on  that  kind  of  subject. 

Q     Did  you  ever  discuss  it  with  anybody  in  his 

A     Not  that  I  know  of. 

Q     Was  this  consultancy  with  EATSCO  your  first 
association  with,  any  venture  dealing  with  the  transport  of 
military  equipment  from  the  United  States  to  Egypt? 

A     I  wasn't  dealing  with  any  transport  of  equipment  to 
Egypt . 

Q     EATSCO  was? 

A     As  I  told  you,  I  did  papers  for  EATSCO.   I  didn't 
have  anything  to  do  with  the  transport  of  the  equipment. 

Q     I  understand  that.  My  question  is  whether  you 
had  any  discussions  about  that  project.   I'm  trying  to  get 
at  when  you  first  found  out  about  this  opportunity  —  this   | 
business  opportunity  to  transport  military  materiel  from  the 
United  States  to  Egypt. 

MR.  MC  KAY:   You  mean  EATSCO 's  business? 

i-fiatwi.  imiTus.  INC. 






Q     Which  became  the  business  of  EATSCO. 

A     I  know  that  at  some  point  in  time  that  Tom  Clines 
was  talking  to  Hussein  Salim  about  forming  a  company  with 
him,  and  so  forth.   I  vaguely  remember  that  kind  of  a 
discussion,  and  so  forth. 

Q     Do  you  know  whether  there  were  any  other  ' 


individuals  that  Clines  of  Salim  spoke  to  with  regard  to 
that  opportunity?  ' 

A     Not  that  I  can  recall. 

Q     Do  you  know  whether  Clines  spoke  to  Erich  von 
Marbod  about  that  business  opportunity  at  any  time? 

A     I  really  don't  know.   I  don't  have  any 
recollection  of  anything  like  that.   I  remember  Clines 
talking  eibout  trying  to  get  into  this  kind  of  a  business, 
that  was  basically  what  he  was  interested  in  it.   My  doing 
was  to  help  him  get  some  of  these  other  companies  going  while; 
he  want  off  into  another  area  of  activity. 

0     Did  you  hear  from  any  source  during  the  period  of 
time  when  Clines  was  interested  in  dealing  with  this 
business  opportunity,  that  Ed  Wilson  was  in  any  way 
associated  with  that  venture? 





A     No.   I  don  t  recall  that  he  was  associated  with  that 
venture,  no. 

Q     That  same  question  with  regard  to  Erich  von  Marbod 

A     No. 

Q     Richard  Secord? 

A     Not  that  I  recall.   I  know  that  Clines  borrowed 
some  money  from  Wilson,  but  that's  in  the  broad  context      < 
of  things,  but  I  don't  recall  the  specific  venture. 

Q     And  what  is  your  source  of  information  on  the- 
borrowing  of  money  by  Clines  from  Wilson? 

A     I  heard  him  talk  about  it. 

Q     You  heard  Clines  talk  eUiout  it? 

A     Yes. 

Q     And  what  was  the  amount  of  money? 

A  I  don't  recall.  It  was  a  fairly  substantial 
cunount  of  money,  which  I  know  he  borrowed  from  him  and 
subsequently  repaid. 

Q     Do  you  have  any  other  sources  of  information,     i 
other  than  Clines?  i 

A     No,  not  that  I  can  think  of  at  this  point. 

Q  Were  you  ever  present  when  Clines  discussed  that 

loan  with  anybody  else,  for  exzunple? 

c-nMML  watmtM.  inc. 





A     No,  not  that  I  can  recall  at  the  moment,  no. 
Q     When  you  say  it  was  a  fairly  substantial  amount  of 
money,  does  half  a  million  dollars  sound  — 

A     It  was  in  hundreds  of  thousands.   I  don't  remember 
how  many  hundreds  of  thousands  it  was,  but  it  was  what  I 
regard  as  a  substantial  amount  of  money. 
Q     And  it  was  at  what  time? 

MR.  MC  KAY:   That  he  heard  of  this  from  Clines? 
MR.  HOLMES:   Right. 

THE  WITNESS:   It  would  probably  have  to  be  in 
1979,  somewhere  in  that  time  period  of  1979-1980. 
Q    So  it  was  the  same  time  period  when  you  and  Clines 
were  in  business  together  and  before  you  struck  out  on  your 

A     Right. 

Q     Well,  have  we  covered  EATSC07   Is  that  your  last 
asaociation  with  EATSCO  or  Salim? 

A     I  don't  recall  anything  else.   I  think  at  one 
time  —  1  have  to  remember  the  sequence.   I  looked  at  some 
trucks.   It  wasn't  for  EATSCO.   I  think  Salim  was  looking  at 
another  opportunity  and  asked  me  to  look  and  see  if  I  could 

.  HMtTUt.  INC. 



226   I 


research  what  trucks  were  available  on  the  market.   I  know 
I  looked  at  some  trucks.   They  were  GMC  trucks  manufactured, 
maybe,  in  the  United  States  with  Mexico  or  something,  but 
nothing  ceune  of  that. 

Q     The  ultimate  destination  of  the  trucks  was  to  be 

A     I  don't  remember  where  the  ultimate  destination 
was.   It  was  something  he  wanted  to  bid  on. 

Q     Did  you  have  any  other  business  dealings  with 
Clines,  other  than  what  we  discussed  previously? 

A     No,  not  that  I  can  recall. 

Q     Let's  move  down  to  the  Bernstein  Brothers,  and  if 
you  could  just  sketch  for  me  the  relationship  with  the 
Bernstein  Brothers. 

A     Bernstein  Brothers  is  a  Colorado  sort  of 
investment  company,  and  I  did  some  work  for  them  in  looking 
at  some  issues  relative  to  offshore  oil  concessions  off  the 
West  Coast  of  Florida. 

Q     During  what  period  of  time  was  this? 

A     I  don't  know.   That  could  have  been  '79,  '80,  '81. 
Somewhere  in  that  period. 

Q     Is  that  the  only  business  you  have  done  with 


.  MMmcn.  INC 





Bernstein  Brothers? 

A     yes.   That's  essentially  it.   I  think  I  wrote  some 
written  papers  for  it.   There  were  some  drop  copies  of  papers 
on  oil-related  matters. 

Q     Would  this  be,  in  general,  your  oil  intelligence   I 
type  service? 

A     Yes.   I  think  at  one  time,  he  was  interested  in    , 

Guatemala  oil  potential,  and  I  think  that's  when  Guatemala  wais 

coming  on  stream.  ! 

MR.  HOLMES:   Would  you  like  to? 



Q     Mr.  Shackley,  again,  I'm  Tim  Woodcock,  also  with 

the  Senate  Committee. 

Mr.  Shackley,  when  did  you  become  ADOO,  Associate 

Deputy  Director  of  Operations?  , 

A     I  think  in  May  or  June  of  1976. 

Q     Now,  in  that  capacity,  did  you  have  much  experience 

I  think,  then,  the  relatively  new  law  governing        ; 

findings,  covert  action  findings? 

A     You  know,  I  know  when  the  findings  ceune  in.   Once 

the  rules  came  in,  basically,  if  you  had  anything  that 






appeared  to  be  in  that  particular  area,  that  was  a  whole  new  . 
art  form  that  was  being  crafted. 

As  I  recall,  that  went  through  a  number  of  changes 
over  the  years  as  to  what  was  to  be  included.   But  I  wouldn't 
want  to  say  my  knowledge  of  the  findings  started  when  I  became 

Q     I  guess,  in  that  capacity,  you  had  some  experience 
with  findings,  the  findings  process? 

A     Right . 

Q  And  it  was  in  an  evolutionary  stage  at  that  time? 

A     Right,  as  far  as  I  recollect. 

Q     Let  me  ask  you  this.   Really,  what  I'm  asking  at 
this  point  are  policy  questions  based  on  your  experience  as 
a  former  ADOO.   In  the  course  of  this  investigation,  we  have 
come  across  instances  in  which  findings  have  been  entered  to 
cover  activity  that  has  already  occurred,  that  is,  covert 
action  activity  that  has  already  occurred. 

Has  there  anything  like  that  in  your  experience 

A     I  can't  recall  any.   No,  I  don't  think  so. 

Wait  a  minute.   Once  you  went  from  one  procedure 
to  anyother,  I  think  the  first  series  of  findings  that  went 





in  covered  what  had  gone  before,  because  this  was  a  new  art 
form.  After  that  art  form  started,  I  don't  recall  any  that 
were  ex  post  facto  approval. 

Q     Now,  based  again  on  your  experience  as  ADDO,  do 
you  have  a  feeling  or  opinion  as  to  the  advisibility  of  such  i 
procedure,  basically,  a  ratification  of  prior  actions  — 
covert  actions?  I 

A     I  could  only  see  that  basically  hapening  in  some   ' 
dire  emergency,  where  something  might  happen,  where  some 
event  would  come  up  and  the  director  would  go  talk  to  the 
president,  and  it  would  be  a  short,  fast-breaking  kind  of 
situation.   But  then  in  a  matter  of  days,  you  would  catch 
up  with  it. 

Q     You  never  actually  had  that  experience? 

A     No.   I  mean,  you  know,  if  you  ask  me  a  theoretical 
question,  could  it  happen,  or  could  there  be  a  set  of 
circumstances  in  which  it  would  be  applicable,  that  would  be i 
tim  only  time  that  I  could  envision. 

Q     The  statute,  as  currently  drawn,  does  not  appear   j 
to  provide  any  leeway  for  that  kind  of  event. 

Do  you  have  any  feeling  as  to  whether  it  ought  to 
be  drafted  to  provide  for  such  a  contingency? 





A     Well,  you  know,  I  think  foreign  policy  events 

sometimes  are  fast-breaking,  and  it  seems  to  me,  in  order  to - 

have  some  short-term  basis  for  taking  action,  if  it's 

appropriately  staffed.   In  other  words,  I  could  see  a 

situation  developing  where  the  Congress  is  not  in  session,   ' 

and  you  don't  want  to  get  on  an  open  phone  to  talk  to 

somebody  across  the  United  States,  and  the  director  goes  to  - 

the  president,  gets  approval  from  him  and  has  to  do  something 

in  24  or  48  hours,  and  it's  necessary  to  put  a  courier  on 

the  airplane  and  send  a  briefer  to  brief  whoever  is  supposed ; 

to  be  briefed.   I  see  it  as  a  very  short-term  kind  of  thing. ' 

Q     Let  me,  along  the  same  line,  in  the  event  that 
you're  faced  with  a  fast-breeUcing  series  of  events  that 
requires  a  covert  action  response,  do  you  have  an  opinion  as 
to  whether  the  covert  action  findings  should  always  be  in 
writing  or  sometimes  not  in  writing? 

A     Given  the  way  things  work,  I  see  no  reason  why  it  . 
caajt  be  camnitted  to  writing,  and  that's  generally  the 
waip  It's  been  dealt  with.   I  knew  of  no  verbal  finding.   I'm; 
not  aware  of  one. 

Q     Given  that  there  is  a  finding  process  —  let  me 
rephrase  that. 





A     As  ADDO,  how  did  you  view  the  written  finding 
system?  Did  you  view  that  as  basically  a  jursidictional 
mandate  for  you  that  you  could  operate  within  the  permises 
of  the  finding  and  not  otherwise? 

How  did  you  interpret  the  finding? 

A     I  saw  the  finding  as  creating  broad  parameters. 
I  certainly  didn't  look  at  it  as  being  something  that  required 
the  dotting  of  every  "i"  and  the  crossing  of  every  "t."   It 
set  up  a  concept  in  which  you  might  engage  in  certain 

Q     Would  it  be  the  base  document  for  those  actions? 
For  example,  if  you  contemplated  a  particular  action,  would 
it  be  your  practice  to  refer  back  to  the  finding  to  determine 
if  it  is  something  contemplated  by  the  finding? 

A     No.   I  think  your  base  documents  would  be  something 
that  would  be  approved  by,  you  know,  whatever  period  of  time 
you're  dealing  with,  the  40   Committee,  the  303  committee. 
Whatever  historical  period  of  time,  because  those  kept 


Your  basic  policy  document  really  came  from  that   { 
kind  of  presentation. 

Then  the  coordination  with  the  Congress  and  the 

ei-noa*i  MravrMs.  inc 



232  ; 

sanctioning  of  it.  by  the  Congress  came  in  your  finding,  but 
your  more  detailed  document  would  have  been  the  document  that 
you  would  use  for  policy  purposes.   Either  one  of  these 
approval  groups. 

Q     The  approval  group  process  would  precede  the 
finding;  is  that  correct? 

A     Yes.   In  most  cases.   You  know,  in  an  emergency, 
maybe  the  two  would  be  going  parallel  and  one  would  get 
ahead  of  the  other,  depending  on  who  was  in  town  and  the 
ability  of  a  meeting,  you  know,  getting  all  the  principals 
together  for  a  meeting. 

Q     And  then  in  the  ordinary  course,  outside  of  the 
exceptional  circumstances,  the  finding  would  have  contemplated 
what  was  already  contemplated  by  the  40  group  or  whatever? 

A     It  would  be  approved  by  it. 

Q     Yes.   So  you,  as  AODO,  having  had  some  participation 
in  that  process,  would  know  both  the  underlying,  detailed 
discussion  that  would  have  occurred  in  committee  and  then    ^ 
also  have  the  knowledge  of  the  findings;  is  that  correct? 

A     That  would  be  the  normal  proviso.   Certainly, 
during  my  time,  that  would  have  been  the  normal  proviso.   In 

'.■naauL  kpmtus.  inc. 





Other  words,  if  I  didn't  prepare  the  papers,  the  DOO  prepared 
them  when  he  came  back  and  would  say,  you  know,  "Here's  what 
has  happened."   But  a  lot  depends  on  the  rapport  between  the 
two  people  and  the  working  and  would  depend  to  a  large  extent 
on  the  director,  at  the  time.   Maybe  it  would  be  a  director  — 
there  wasn't  one  during  my  time,  but  maybe  there  would  be  a 
director  who  would  want  to  compartment  something  in  a  special 

Q     Let  me  ask  you  the  question  a  little  bit  differently. 
Assuming  that  a  covert  action  has  been  authorized 
and  a  particular  course  of  action  was  contemplated,  where 
would  you  have  gone  to  determine  that  what  you  were 
contemplating  was,  in  fact,  authorized? 

A     You  mean  if  I  had  sc^ne  doubts? 

Q     Correct. 

A     Well,  in  my  case,  if  I  had  any  doubts,  I  would  have 
gone  to  the  director. 

Q     And  then,  in  your  experience,  where  would  the 

diractor  go  to  get  confirmation,  if  he  had  doubys?   Would  he 


go  back  to  the  committee?  I 

A     No,  1  think  the  inclination  —  that's  a  very  hard   ! 


one   to  deal  with,    because   I'm  not  sure  what  has  gone  before.      | 

:('ftoeuu.  •cKWTfM.  inc 




Let  me  try  to  recast  this  and  see  if  we're  talking  about  the 
same  language. 

Q     Please  do. 

A  Let's  say  we  had  put  in  something,  a  proposal  to 
the  40  Committee,  because  I  don't  know  what  period  of  time 
you're  talking  about.   Let's  just  say  the  40  committee.   And 

at  the  same  time  you  had  put  in  a  porposal  as  soon  as  this  wa^ 


approved  by  the  40  Committee,  and  you  had  gotten  a  finding, 
so  that  you  had  everything  properly  coordinated  within  the 
governmental  structure . 

Then  if  I  were  sitting  down  here  as  ADDO  and  the 
item  came  up  which  caused  me  to  question  whether  this  was  in 
this  authority,  I  would  first  go  to  the  director.  The  director, 
if  he  had  some  qualms  about  it,  would  undoubtedly  go  to  the 
president  or  to  the  National  Security  Adviser.  A  lot  depends 
on  the  personal  relationship  between  the  people  at  the  time. 

I  mean,  there  have  been  times  when  directors  and   . 
National  Security  Advisers  have  not  had  the  best  of  rapport,  - 
and  there  are  other  times  when  they  have  had  good  rapport,    < 
and  that  would  be  the  place  for  them  to  go.  That's  where  you 
would  start  the  process  of  clarification.   It  could  be  a 
matter  of  minutes  before  they  could  clarify  it;  it  could  be  a 


crnaouL  tventM.  inc. 





day.   But  I  wouldn't  ejtpect  it  to  be  more  than  a  day,  because, 
obviously,  it  would  be  something  that  would  be  pressing.   It 
would  be  something  that  would  be  troublesome  to  the  ADDO  or 
the  DDO. 

Q     As  ADDO,  did  you  have  routine  access  to  presidential 

A     Yes.   During  the  time  I  was  there  I  had  a  free 
exchange  with  the  fellow  that  I  worked  with,  and  I  knew  of    ' 
no  action  of  this  type  that  I  wasn't  aware  of.   I  mean,  I 
have  not  been  aware  of  each  and  every  detail,  but  generally, 
I  was  aware  of  what  was  going  on,  and  we  were  interchangeable. 
The  other  fellow  travelex  extensively,  and  when  he  was  gone, 
I  ran  the  shop. 

Q     Who  was  the  DDO,  when  you  were  ADDO? 

A     Bill  Welles. 

Q     Do  you  know  of  any  insatance  when  a  finding  was 

not  provided  to  the  CIA?  That  is,  not  physically  provided? 

A     I  have  no  recollection  of  such  a  thing.   I  mean, 

wban  a  finding  was  signed  off  on,  you  know,  it  always  came 


Q     Came  back  to  the  CIA? 


t-fOOM.  RfMWmS.   INC 





Q     Where  it  could  be  checked  by  you,  if  need  be,  or 
anyone  else? 

A     Yes.   I  would  be  available  to  the  director,  let's 
say.   The  DDO  of  AODO  would  be  available  to  the  Office  of 
General  Counsel. 

Q     Right.   Let  me  ask  you  this.   We  have  come  across, 
in  our  experience  in  this  investigation,  an  instance  in  which 
a  finding  was  signed,  and  the  original  was  kept,  and  that 
original  was  kept  at  the  NSC.   No  copy  was  transmitted  to     , 
CIA  for  nearly  a  year?  ' 

Would  you  have  an  opinion,  based  on  your  experience 
as  AODO,  as  to  the  suitability  of  that  kind  of  a  procedure? 

A     Well,  I'd  say  it's  unusual. 

Q     How  about  good  or  bad? 

A     Well,  I  think  you  need  to  have  a  straight  flow 
of  paper  back  and  forth.   I  would  expect  we  would  have  gotten 
a  copy  of  the  paper,  and  I  would  looked  for  it. 

Q     And  you  never  had  any  experience  where  someone 
wittkheld  a  paper? 

A     No,  I  don't  ever  recall  any  problems  with  that 
aspect  of  the  procedures. 

Q     In  your  experience,  in  the  event  that  a  covert 

n-nooM.  KMMrrns.  inc. 





( action,  at  some  point,  came  to  light,  do  you  know  whether 
you  or  the  CIA  would  have  used  the  existence  of  the  finding 
as  providing  some  protection  for  the  Agency? 

A     I  think  you  would  want  to  know  that  if  it  fell  in 
that  category,  you  would  want  to  know  that  it  has  been 
approved  by  the  40  committee  and  that  it  had  been  approved 
by  the  finding,  so  you  could  establish  that  this  was 
appropriately  coordinated,  and  it  was  a  government  program. 
Q     And  authorized? 
A     Yes. 

Q     And  by  the  converse,  in  the  event  that  a  coveirt 
action  was  attributed  to  either  our  government  or  the  CIA, 
in  particular,  that,  in  fact,  we  had  nothing  to  do  with, 
would  the  nonexistence  of  a  finding  then  argue  that,  in  fact, 
at  least  from  among  our  leadership,  we  were  not  associated 
with  it? 

A     I  think,  in  all  probability,  that  would  be  the 
way  people  would  approach  it.   If  you  don't  have  it,  it's 
not  there.   I  think  that  would  be  the  general  view. 

Going  back  to  this  thing,  it's  also  possible  that 
the  legislative  counsel  at  various  times  play  different 
roles,  and  they  would  have  been,  in  some  cases,  involved  in 

c-naoM.  wRwinn.  inc. 




arranging  meetings  in  relationship  to  the  finding  for  the 
director  or  for  others  to  brief  the  congressional  committee, 
so  you  would  have  another  component  of  the  Agency  involved. 

Q     As  a  matter  of  course,  do  you  know  who  would  have 
been  consulted  before  a  finding  would  have  been  issued  during 
your  tenure  as  ADDO? 

I'm  speaking  in  terms  of  the  Attorney  General  or 
Secretary  of  State.  Would  those  people  automatically  have 
been  consulted? 

A     They  would  have  been  consulted  in  the  context  of, 
say,  the  40  Committee  mechanism,  because  they  are  senior 
representatives  and  would  be  sitting  in  at  the  40  Committee. 
So  that  individual,  the  senior  State  person,  would  go  back, 
and  it  was  incumbent  upon  him  to  make  sure  the  Secretary  of 
State  was  appropriately  briefed  and  concurred. 

Q     Do  you  know  of  an  instance  during  your  tenure  as 
ADDO,  when  a  finding  did  not  go  to  the  40  Committee? 

A     I  can't  recall  one.   I  mean,  I  don't  have  any 
memory  of  any  such  thing. 

Q    Let  me  ask  you  a  question  on  the  concept  of        [ 

plausible  deniability.  1 


First,  if  you  would,  could  you  describe  for  me 


ct-ftaoM.  HKtraj.  inc 




how  you  perceive  the  concept  of  plausible  deniability. 

A     Well,  the  concept  of  plausible  denial  has  gone  a 

number  of  mutations  over  the  years.   Its  initial  presentation 

probably  in  the  fifties,  was  that  you  wanted  to  create       i 

covert  action  in  a  way  that  the  U.S.  government  and  the 

senior  policymaUcer,  i.e.,  the  president,  could  say  that  he 

was  unaware  of  that  particular  action  and  had  it  structured  j 

in  such  a  way  thatyou  had  policy  approval  for  the  action     ' 

within  the  U.S.  government,  but  you  didn't  have  a  tangible   ! 

audit  trail  leading  to  the  president.   That,  in  fact,  is 

what  was  inherent  in  such  mechanisms  as,  let's  say,  the  40 

Committee,  which  we  used  generically  here.  That  is,  it  would 

be  approved  by  the  senior  policymaking  body,  that's  where 

the  approval  came  from,  and  it  stopped,  essentially,  there. 

Although  they,  in  turn,  might  have  briefed  the  president. 

But  the  trail  led  to  the  40  Committee. 

Q     But,  in  fact,  under  that  set  of  circumstances, 

didn't  that  assume  that  at  some  point  the  president  was 


made  aware  of  the  process? 

A     Yes.   I  think  one  would  have  to  assume  the 
president  was  made  aware.   I  think  that  was  a  fact,  that 

'.i-nsoM.  Mmnus.  inc. 





the  president  was  made  aware,   but  it  was  this  concept  of 
plausible  denial .   I  think  after  you  had  the  investigatations 
essentially,  in  the  seventies,  the  concept  of  plausible 
denial  went  by  the  wayside,  because  the  finding  mechanism 
required  the  president  to  sign  it.   Therefore,  once  the 
president   signed  a  finding,  you  had  an  audit  trail  leading 
to  the  top  policymaker  in  the  United  States  government  and   : 
plausible  denial  was  no  longer  plausible. 

Q     Right.   There  was  some  testimony  —  I  don't  know 
whether  you  heard  it  —  that  seemed  to  revive  the  concept  of 
plausible  denial,  for  aspects  of  the  Iran  operation,  and  I 
believe  it  was  Admiral  Poindexter  espoused  his  view  of 
plausible  denial  as  essentially  encompassing  a  process 
whereby  the  president  was  not  informed  at  all  of  covert 

Was  that  ever  a  live  theory  within  your  experience? 

Q     Not  in  my  time .  , 

Q     I  mean,  in  fact,  that's  absolutely  absolute 


deniability,  is  it  not?  j 

A     Right . 

Q     Not  plausible,  as  a  fact? 
A     Right.   1  don't  see  how  that  can  function,  if  you 


-.E-ftMML  (fNamt.  IMC. 




have  so  many  other  aspects  —  budgetary  aspects,  manpower 
aspects,  you  know,  interfacing  with  cover,  and  so  forth.   I 
don't  see  how  that  could  transpire. 

Q     But  that  expression,  to  the  extent  it  assumes 
the  president  is  not  told  at  all ,  did  not  comport  with  your 
understanding  of  how  plausible  denial  was? 

A     No.   As  I  say,  there  may  have  been  a  couple  of 
minor  shadings  in  between  these  two  very  severe  definitions , 
but  the  benchmark  that  I  was  seeing  would  be  the  50  to  70, 
whatever  it  was,  72,  to  the  Church  Committee  period,  and 
the  Pike  Committee  created  another  watershed,  where  you  had 
this  proceeding,  and  after  that  you  had  a  trail  that  would 
lead  directly  to  the  president. 

Q     There  was  a  rule  within  CIA  —  I'm  going  to  show 
you  a  copy  of  it. 

MR.  WOODCOCK:   Let  me  just   have  it  marked  8. 

(Shackley  Deposition  Exhibit  8 

Q     Mr.  Shackley,  I'm  going  to  show  you  what  has  been 
marked  as  Deposition  Exhibit  No.  8,  and  it  is  taken  from 
the  CIA  Regulation  Book,  and  I  have  put  a  green  bracket 





around  the  letter  "H,"  which  reads: 

"Support  to  the  White  House  office." 
That  reads  as  follows: 

"Any  support  requested  by  or  extended  to 
the  White  House  office,  excluding  the 
production  and  dissemination  of  foreign 
intelligence,  must  have  the  prior 
approval  of  the  director." 
Are  you  feuniliar  with  that  rule? 
A     I  don't  recall  it,  but  let's  see  if  I  can  see  when 
it's  dated.   It  looks  like  it's  dated  1978. 

No,  I  don't  recall  this  rule  off  the  top  of  my 
head,  but  it's  the  kind  of  embodiment  of  what  the  procedures 

In  other  words,  nobody  would  go  to  the  White  House 
or  be  in  touch  with  the  National  Security  Adviser  without 
having  some  coordination,  internally,  and  having  the  approval 
of  the  director. 

In  a  progreunmatic  sense,  you  might  have  approval   , 
from  the  director,  yes,  we're  going  to  be  talking  about      I 
paramilitary  operations  in  Laos,  let's  say.   There  might 
have  been  a  historical  period  when  somebody  might  have  said. 





yes,  we're  going  to  be  talking  about  those  kinds  of 
operations,  and  here's  what  we're  going  to  be  dealing  with, 
and  you  get  approval  frotn  the  director. 

Q     And  so  that  was  before  the  embodiment  of  this 

A     Yes,   I  just  don't  happen  to  recall  that 
particular  rule. 

Q     Let  me  ask  you  this,  Mr.  Shackley. 

Based  on  what  you  have  just  said,  when  you  were 
ADDO,  if  a  call  had  come  into,  say,  your  office,  directly 
from  an  NSC  staff  person  saying  the  National  Security 
Adviser  has  told  me  that  he  wants  to  use  the  following 
resources  of  CIA  for  the  following  purposes,  would  you  have 
felt  that  you  would  have  been  in  a  position  to  say,  okay,  or 
would  you  have  had  to  go  beyond  that  to  seek  approval  for 
that  request  within  the  CIA? 

A     Well,  if  it  was  within  the  scope  of  an  approved 
program.   If  it  was  not  within  t  he  scope  of  an  approved 
program,  I  would  not  have  felt  that  I  could  do  that  on  my 

Q     Now,  again,  in  your  experience,  first,  did  you 
ever  have  that  kind  of  experience? 

E-moM.  Mfomn.  inc. 




A     No,  I  don't  2ver  recall  having  anything  like  that. 

Q     Second,  if  you  had,  what  would  have  been  your 
procedure  to  get  the  proper  authority  to  move  ahead  on  that 

A     Well,  if  the  DDO  was  in  town,  I  would  have  called 
him  and  said,  "You  know,  I  don't  know  why  you  didn't  get 
this  call.   I'm  home,  you're  out.   Do  you  know  anything  that 
I  don't?"   It  might  have  been  during  the  course  of  the  day 
I  had  not  seen  him,  the  way  the  schedule  went  or  something. 

I  might  have  been  up  on  the  Hill  testifying  on 
something,  and  he  might  have  been  dealing  with  foreign 
liaison  or  something,  and  we  just  didn't  meet  by  the  end  of 
the  day.   "What  do  you  know  that  I  don't  know." 

That  would  have  been  my  first  reaction.   If  he  said 
he  didn't  know  anything,  then  we  would  have  agreed  between 
us,  who  was  going  to  take  the  next  step,  i.e.,  I  probably 
would  have  taken  it,  because  the  call  came  to  me,  and  my     j 
next  step  would  have  been  to  call  the  director.   Or  if  the 
director  wasn't  in  town,  call  the  acting  director. 

Q     And  it  would  have  gone  to  either  one  or  the  other 
for  approval  before  you  would  have  taken  steps? 

A  Yes. 

let-aaoM.  MPorms.  inc 



■.i-aaatL  laatrtn.  inc. 



Q     In  your  experience,  has  the  NSC  itself  ever 
performed  covert  operations? 

A     None  that  I'm  aware  of. 

Q     And  the  CIA  was  seen  as  the  primary  implementer 
or  covert  operations;  is  that  correct? 

A     That's  correct. 

Q     And  I  gather,  in  some  circumstances,  purely 
military,  perhaps  only  the  military  would  implement  it;  is 
that  correct?   Did  you  ever  have  that  experience? 

A     On  a  covert  action? 

Q     Right.   Ever? 

A     I  think  I  can  recall  the  military  being  given 
action  responsibility  to  implement  something,  but  they,  too, 
have  a  coordination  mechanism. 

Q     With  the  CIA? 

A     With  the  CIA  and  depending  on  the  nature  of  the 
program,  it  could  have  been  a  military  program  put  into  the 
4  0  Committee  format,  approved  by  the  40  Committee  and  the 
finding  found,  but  the  instrxment  for  implementation  would 
be  the  military. 

Q     Let  me  back  up  to  the  subject  of  getting  approval 
or  getting  a  request  from  the  NSC  to  take  action.   Let  me 





get  down  to  some  specifics. 

If  an  NSC  staffer  called  you  to  enlist  your 
support  to  gain,  for  example,  flight  clearances  in  foreign 
countries  for  a  flight,  would  that  be  something  you  would    i 
deal  with  and  take  up  the  line? 

A     If  it  had  nothing  to  do  with  an  approved,  you  know, 
activity  —  you  always  have  to  structure  this.   If  it  were 
an  ongoing  program,  I  would  have  to  make  a  judgment  as  to    ] 
whether  that  was  within  the  tolerance  threshold  of  the      ' 
authority  that  I  had.   And  if  it  were  an  approved  program, 
I  would  have  to  judge  it  at  that  point  in  time,  as  to  what 
I  wanted  to  do.   12:00  o'clock  at  night,  you  know,  the 
director  is  out  of  town,  and  I  would  know  he's  out  of  town, 
and  the  acting  director  is  at  some  conference  or  something, 
I  would  have  to  sort  of  judge  all  those  things  amd  then  make 
a  decision  within  the  scope  of  the  approved  program.   If  it  ' 
was  not  an  approved  program,  it  would  be  the  kind  of  thing   | 
that  I  would  have  to  go  to  somebody  else  and  say,  "Hey, 
this  is  something  I  don't  know  anything  about. 

"This  is  an  unusual  requirement.   It's  out  of  the 
scope  of  our  charter,  and  what  do  you  know?" 

Q     So,  before  you  began  calling  your  chiefs  of 

■t-nauM.  •tnwTus.  inc 





Station  to  prepare  whatever  flight  clearances, y^u'd  have  to 
go  through  the  process  you  just  described? 

A     Yes. 

Q     Now  what  you  have  just  testified  to  —  and  correct 
me,  if  I'm  wrong,  I  think  that  is  assuming  that  you  would 
feel  an  obligation  to  question  the  NSC  staffer  as  to  what 
precisely  it  was  he  was  trying  to  accomplish? 

A     Yes,  I  think  I  would  ask  a  question,  and  he  might  ' 
say  this  is  some  approved  program,  the  director  knows  about 
it,  if  you  don't.   This  is  the  help  that  I  need,  or  something 
like  that.   And  I'd  say,  fine,  I  got  to  check  it  out. 

Q     Right.   In  other  words,  get  the  director's 
approval?   You  would  have  to  check  it  out? 

A     Right. 

Q     You  wouldn't  rest  on  his  word  alone;  you  would 
let  the  director  know  about  it,  then  do  it? 

A     It  depends  on  the  interrelationships  people  have 
with  the  memagement.   I  mean,  the  time  I  was  there,  I  felt 

confortable  in  being  able  to  call  the  director  at  any  time 


of  day  or  night  and  say,  hey,  I  got  a  problem,  and  here's   | 


.      .1 
the  issue  and  here  are  my  concerns  or  here  s  my  recommendatipn. 

Q     Let  me  Jbid  another  layer  to  this  hypothetical. 

Cf-nOOM.  KHWrUS.   INC. 






Let ' s  assume  that  you  go  ahead  and  you  ask  the 
NSC  staffer  what  it  is  that  he  is  trying  to  accomplish,  and 
he  gives  you  a  story  which  you  suspect  to  be  a  cover  story; 

would  you  feel  satisfied  to  take  the  cover  story, with  your 


suspicions,  to  the  director,  or  would  you  try  to  penetrate  j 
the  cover  story  with  the  staffer? 

A     You  know,  that's  a  hard  one  to  answer.   I  don't 

know.   A  lot  would  depend.   My  own  inclination  would  be  thati 

I  don't  work  for  the  NSC  staffer,  I  work  for  the  director, 

and  therefore,  if  I'm  going  to  err  on  the  side,  you  know,  o£ 

being  on  one  side  or  the  other,  I  got  to  pay  attention  to 

what  the  director's  equity  is,  so  I  would  be  inclined  to 

go  to  the  director  and  say,  look,  I  don't  know  anything 

about  this .   More '  s  a  rec[uest .   Yes ,  I  can  implement  it , 

but  I  don't  know  anything  2d>out  it,  and  your  name  is  being 

quoted  here  as  having  knowledge  of  it  or  approval  of  it  or; 

something.   So  what's  the  word,  boss?  | 

Q     All  right.   Let's  leave  the  hypothetical  director; 

approval  out  of  it  and  just  go  to  the  question  of  whether 

you  would  feel  obligated  to  pierce  that  cover  story. 

Let's  assume  he  has  not  represented  the  director 

has  approved  the  operation. 

tetHaaoL  KPorrtn.  inc. 



C-mOM.  MNtllU.  INC. 



A     I  don't  think  I'd  necessarily  be  inclined,  if  he 

said,  "Look,  I  want  to  do  X,  Y  or  Z,  it's  not  within  an 

approved  program,  I  have  no  knowledge  of  this  before,"  and 

he  says,  the  National  Security  Adviser  or  somebody  wants  to 

do  it,  I'd  say,  "Gee,  that  doesn't  make  an  awful  lot  of 

sense  to  me.   What  is  it  about?"   And  he  says,  "That's  all 

I  can  tell  you,  that's  all  I'm  authorized  to  tell  you." 

I'd  say,  "Well,  I  got  to  get  back  to  you.   I'm    ! 

not  authorized  to  do  it."  ; 

Q     Right.   So  I  gather  —  let  me  fashion  a  response, 
and  you  tell  me  if  I'm  wrong.   At  a  minimum,  you  would  feel 
obligated  to  go  to  the  director  and  say,  "I  have  been 
called  by  the  NSC  staffer.   They  have  proposed  the  following. 
They  have  given  the  following  rationale,  and  you  should 
know,  I  suspect  it's  a  rationale,  a  cover." 

A     Yes.   Or  I'm  uncomfortable,  or  it  doesn't  make 
sense  to  me  or  something  like  that.   A  lot  depends  on  who 
is  in  to%m.   If  the  DDO  was  in  town,  I  would  call  him      ! 



Q     But  either  way,  it  would  be  the  same  discussion?  { 

A     Either  way,  the  seune  flow. 

Q     And  it  would  be  up  to  the  person  to  make   the 





judgment  as  to  whether  to  pierce  the  story  or  not? 

A     Right. 

Q     Let  me  get  back  to  the  NSC,  as  a  performer  of 

operations,  and  again,  I'm  asking  you  td  draw  on  your        ' 

experience  as  a  member  of  the  CIA. 

In  your  opinion,  is  the  NSC  an  appropriate 

institution  to  perform  covert  operations? 

A     No,  I  don't  see  them  as  an  implementer  of         | 


Q     Now,  why  do  you  say  that? 

A     Well,  basically,  they  don't  have  the  structure 
to  do  that,  and  by  and  Icirge,  they  don't  have  the  experience 
to  do  it.   In  other  words,  most  of  the  people  who  are 
assigned  to  the  NSC  staff  have  substantive  positions,  you 
know,  go  into  these  jobs  either  as  political  appointees  or 
come  front  the  academic  or  economic  community  or  business. 

They're  in  there  for  two  or  three  years,  four 
years,  amd  they  are  gone.   And  they  don't  have  anybody  of    . 
experience.  Or  they  are  people  that  come  from  other  agenciesj. 
State  Depairtment,  and  so  forth,  where  they  may  be  top  notch 
2uiaiysts  in  a  particular  area  or  region  and  familiar  with 
policy  but  aren't  familiar  with  program  implementation. 




I  just  don't  see  the  talent  being  there  for  it. 

Q     Do  you  think  it  should  be  given  the  capability 
to  perform  covert  operations? 

A     No,  as  a  personal  opinion,  no. 

Q     Again,  why? 

A     Because  1  don't  think  we  have  the  depth  of  skill 
and  experience  to  permit  the  U.S.  government  to  staff  those 
kind  of  functions  adequately  by  having  multiple  repositories 
to  implement  those  kind  of  programs. 

Q     In  effect,  a  second  small  CIA? 

A  Yes.  I  don't  see  that  we  have  the  talent.  And 
this  kind  of  talent  is  not  developed  in  a  short  period  of 
time,  and  the  opportunities  for  developing  talent  of  this 
kind  are  significantly  decreased. 

Let  me  make   that  point.   It  is  a  troublesome 
point.   I  think,  if  you  took  somebody  who  came  in  to  the 
CIA  up  to  the  mid- '50s,  they  entered  prior  to  '55,  '56, 
probably  in  two  yeairs'  time  or  three  years'  time  in  the 
fiald,  they  acquired  more  experience  than  the  fellow 
entering,  let's  say,  in  the  '80s  will  in  ten  years. 

Q     Why  do  you  say  that?  That's  an  interesting 

coRonent . 

[-aDciM  inoaTEiis.  inc. 





A     Because  that's  why  I'm  making  it.   Because  the 
opportunities  aren't  there.   The  political  sensitivies  are 

Let  me  use  an  example  —  two  examples  —  to  perhaps, 
make  my  point.  i 

Take  Germany.   Before  the  wall  went  up  in 

Germany,  in  Berlin,  there  were  thousands  of  people  flowing   | 

across  the  border  daily,  so  there  was  a  lot  of  opportunity  [ 

to  get  exposure  and  experience  in  pursuing  programs,  because  ; 

there  was  just  this  vast  array  of  people  coming  out  there, 

which  was  a  potential  pool  within  which  to  work.   After  the 

wall  went  up,  that  decreased,  and  therefore,  a  young  officer 

coming  out  has  to  wait  months  before  he  ever  gets  his  chance 

to  even  pursue  one  action. 

In  the  earlier  days,  the  guy  had  trouble  deciding 

which  of  the  ten  good  things  was  he  going  to  pursue  in  the 

course  of  a  day.  ^ 

Hong  Kong  is  the  same  thing.   The  flow  of  people 

coning  out  of  China  was  great  at  one  point  in  time,  and  then 

it  was  closed  off. 

Q     And  I  gather  that  was  generally  true  in  almost 

all  locations,  and  it  is  today? 





253  . 

A     Yes.   And  also  the  political  sensitivities  are  much: 
tighter  in  a  lot  of  places  around  the  world,  where  a  mistake 
is  much  more  costly  to  the  United  States,  so  the  young 
officer  coming  in  now  has  less  opportunity  to  gain  experience. 

Q     The  CIA,  in  that  period,  too,  had  a  pool  in  that  \ 
period,  in  particular,  I  think,  from  Europe,  of  people  who 
were  expatriates  from  European  countries  and  were  enlisted  in  i 
the  CIA  or  OSS,  who  were  culturally,  I  think,  more  sympathetic 
to  the  countries  in  which  they  were  stationed  than  it  is     ' 
today;  is  that  your  experience? 

A     No.   I  think  what  you  had  out  of  that  is  a  greater 
reservoir  of  language  skills  and  cultural  understanding,  but 
not  necessarily  sympathy  for  the  countries  that  they  were 
working  in. 

Q     Well,  I  guess  that's  a  bad  choice  of  words.   A 
greater  understanding.   Let  me  put  it  that  way. 

A     They  understood  the  environment  in  which  they  were , 

working,  and  they  had  greater  language  skills. 


Q     That's  a  natural  process,  as  people  get  old,  older 
that  they  were  unable  to  reap  the  circumstances  under  which 
we  would  have  that  manpower  reservoir  of  persons  from  other 
countries  coning  into  the  CIA. 

CI-mOM.  lEMMTEas.   INC 




In  your  experience,  at  the  time  you  were  leaving, 
was  the  CIA  successfully  addressing  this  debriefing  of,  say, 
native  language  speakers  in  its  ranks? 

A     Yes.   Attempts  were  being  made  to  do  that.   There  j 
were  various  programs  which,  in  part,  eliminated  some  of 
that,  because  you  had  a  different  managerial  approach.   The 
approach  came  in  at  one  point  in  time  in  which  you  had  to 
look  at  the  young  officer  who  had  to  go  up  or  out,  in 
essence,  whereas,  in  this  business,  there  are  a  lot  of 
people  who  may  have  acquired,  for  whatever  reason,  very  good 
language  skills  and  area  knowledge  and  should  be  left  in  a 
particular  area.   Not  everybody  has  to  come  in  as  a  junior 
officer  and  aspire  to  be  a  director. 

In  other  words,  a  guy  can  come  in  and  have  a  very 
honorable,  productive,  satisfying  career  and  to  come  in  as 
a  junior  officer  trainee  and,  you  know,  retire  as  equivalent 
of  a  full  colonel  in  the  Army,  and  you  know,  be  the  greatest; 
expert  on  Fremce  or  Pakistan  or  whatever  area  —  Indonesia 
or  Southeast  Asia  or  Africa.  j 


Q     You  just  mentioned  a  difference  in  managerial     { 
philosophy.   That,  I  gather,  has  resulted  in  shifting  people 
around  in  fair  amounts;  is  that  the  idea? 








A  No,  it's  also  this  idea  that  you've  got  to  have  a 
throughput  in  an  even  cone  in  all  age  grade  activities,  and 
so  forth. 

Q     I  guess  I'm  not  following  you.   What  are  you 
describing  there? 

A     If  you  take  the  total  personnel  and  make  a  chart, 
you  can  divided  your  personnel  by  grade  and  age,  and  so 
let's  say  you  have  an  X  number  of  GS-12s,  and  then  you  have 
so  many,  and  you  have  a  throughput  kind  of  thing.   You  start 
off  with  a  very  large  base  here,  and  the  higher  the  grades 
are,  the  lower  the  numbers  are.   All  right. 

There  was  a  theory  of  management  put  in  by  one 
group  that  you  had  to  have  this  large  base  and  everybody  had 
to  be  moved  along  on  an  up  or  out  kind  of  proposition, 
almost  like  the  military  structure. 
Q     When  did  this  come  in? 

A     This  came  in  in  probably  about  '77,  '78,  somewhere 
in  there. 

Q     During  the  Turner  years? 
A     Well,  you  came  to  that  conclusion.   I'm  not  lookincf 
to  be  — 

Q     I'm  not  assigning  it  directly  to  him.   He  would 







256  I 

have  been  director  at  that  point? 

A     He  would  have  been  the  director  at  that  time, 
I'm  not  looking  for  a  polemical  discussion. 

Q     I'm  just  trying  to  place  it  in  time. 

A     Others  don't  have  that  seune  theory.   There's  a 
theory  that  you  bring  people  in  and  you  find  that  an 
individual,  let's  say,  is  the  son  of  a  missionary,  his      ! 
father  has  served  as  a  missionary  in  Korea,  and  he's  learned. 
Korean,  and  he's  got  to  American  University  to  study  Korean,  ' 
and  gone  to  one  of  these  area  study  progreuns,  and  so  forth, 
and  speaks  fluent  Korean,  and  he's  interested  in  that  area, 
then  you  might  want  to  use  him  in  the  context  of  the  Korean 
situation  for  a  long  period  of  time. 

He's  got  a  broad  career,  but  perhaps  the 
cap  on  that  career  is,  he  would  get  to  be  a  GS-15,  but 
b«c«use  he  gets  to  be  a  GS-15  at  age  40  and  doesn't  go  any 
further,  it  doesn't  mean  at  45,  you  should  retire  him, 
because  he  has  no  aspirations  at  being  director,  he's  not 
director  material,  but  he's  a  hell  of  a  good  man  for  what 
he  does .   He ' s  got  area  knowledge ,  language  interests ,  and 

ei-^taoM.  KPOtTon.  inc. 






so  forth,  and  these  are  the  differences. 

So  we  have  lost  a  lot  of  skills. 

Q     Do  you  know  whether  the  cone  philosophy  that  you 
just  described  is  still  in  vogue  today? 

A     I  have  no  idea.   I  have  lost  all  contact. 

Q     We  have,  in  the  course  of  this  investigation, 
come  across  what  people  tell  us  is  an  unusual  situation, 
in  which  a  national  intelligence  officer,  in  effect,  acted 
as  a  case  agent  for  Manucher  Ghorbanifar. 

Do  you  recall,  in  your  experience,  a  national 
intelligence  officer  ever  taking  on  those  kinds  of 

A     Being  a  case  officer? 

Q     Right. 

A   -No,  I  don't  recall  that  ever  happening,  no. 

Q   1  No,  granted  that  you  had,  I  gather,  one  day  in 
which  you  met  with  Ghorbanifar,  November  20,  '84,  do  you 
have  an  opinion,  based  on  that  meeting,  whether  he  was  an 
individual  that  you  would  have  run  as  an  agent  or  not,  and, 
if  so,  do  you  have  an  opinion  as  to  how  you  might  have  run  a 
person  like  Ghorbanifar? 

A     Well,  if  you  will  go  back  to  my  memos,  you  will 





see  that  in  several  places  I  have  said  in  those  memos  that 
he  would,  a)  be  a  different  person  to  manage;  that  whoever 
managed  him  r;«»rtainly  had  to  have  certain  talents  and  certain 
skills,  and  I  raised  that,  I  think,  in  both  memos  that  I 
wrote,  as  a  cautionary  note,  because  he  is  a  complicated     ' 
man,  and  I  envisioned  difficulties  from  dealing  with  this 
guy,  and  I  said  that  in  those  memos,  and  I  think  it's  very   i 
clear,  and  I  think  if  I  had  been  trying  to  work  with  him, 
I  would  have  used  somebody  who  knew  him  as  an  intermediary. 
And  I  don't  know  what  else  what  was  available,  but  just  in 
the  short  time  I  was  involved,  I  would  have  probably  used 
somebody  like^^^Hf^^^^^^Hto  try  to  work  with  him. 
I  think  I  would  have  used  him  much  more  as  a 
cutout  or  filter. 

Q     "Used"? 

^^^^^^^^^^^^H  Somebody  like 
And  maybe  I  would  have  used^^^^^^^^^Vor  somebody  like 
that,  who  you  had  more  confidence  in  and  had  more  of  a 
stake  in  the  United  States,  and  interest  and  so  forth. 

Q     Let  me  ask  you  another  question,  this  one,  coming 
to  you  out  of  the  blue.   Would  you  have  an  opinion  on 
whether  the  position  of  inspector  general  at  CIA  should  be 

i-rauM.  MMMrrus.  inc. 





confirmed  by  the  Senate? 

MR.  MC  KAY:   Have  you  ever  had  an  opinion  before 
this  moment? 

THE  WITNESS;   No,  I  thought  about  it  before.   No,  : 
I  don't  think  he  should  be  approved  by  the  Senate.  ' 


Q     And  why  not? 

A     I  think  that  would  tend  to  politicize  the         ' 
position,  and  you  find  a  lot  of  people  trying  to  build 
careers  are  perhaps  seeking  the  kind  of  congressional 
exposure,  which  may  not  be  good  for  an  institution. 

Q  How  do  you  see,  absent  some  kind  of  congressional 
involvment  in  the  IG,  ensuring  that  the  Office  of  Inspector 
General,  CIA,  is  functioning  properly  and  aggressively? 

A     Well,  I  think  you  could  do  that  with  program 
reviews;  that  is,  the  Office  of  Management  and  Budget,  when 
they're  doing  their  annual  program  review,  they  can  certainly 
focus  on  that  kind  of  a  problem.   I  mean,  you  can  look  at 

the  quality  of  the  person  being  assigned,  the  number  of     i 

people  being  assigned.   You  can  look  at  the  dollars  which 

are  being  allocated  to  the  budget  and  the  Office  of 

Management  and  Budget  does  have  the  ability  to  review 






a)  what  has  transpired  in  the  past  fiscal  year,  in  terms  of 
programs;  what  have  they  looked  at  and  what  have  you  got 
on  your  plate  for  the  coming  fiscal  year  and  what  do  you 
know  about  the  problems  that  you're  working  on.   Their 
continuing  interest. 

One  problem  might  well  be  this  language  problem. 
In  other  words,  we  understand  it's  a  problem,  what  are  you, 
the  Inspector  General,  going  to  do  about  this?  Not  just 
in  regard  to,  let's  say,  the  DDO;  what  are  you  going  to  do 
about  it  in  terms  of  looking  out  for  the  Agency  as  a  whole? 
What  about  DDI?  What  are  their  language  skills  at  this 
point  in  time? 

Q     When  you  were  at  CIA  —  let  me  limit  it  just  to 
your  experience  as  ADDO. 

When  you  were  ADDO,  was  the  inspector  general 
position  seen  to  be  a  position  that  was  a  step  up  on  the 
ladder,  a  place  from  which  people  would  go  on  to  bigger  and  , 
better  things? 

A     Well,  you  have  to  answer  that  in  two  different    j 
ways.   If  you're  saying,  was  it  seen  by  somebody  in  the  DDO 
as  a  stepping  stone  to  a  larger  job,  I  would  say  no.   If 
you're  looking  at  some  other  component,  it  was  conceivably 

:i-nMiM  iao«ms.  inc 





a  platform  from  which  to  go  to  bigger  and  better  things. 

Q     And  when  you  say  "some  other  component"? 

A     Well,  let's  say  something  like  Deputy  Director  for 

Administration.   I  think  somebody  could  see  themselves  moving; 

from  a  position  in  the  Director  of  Administration  to  be      ' 

Inspector  General,  and  a  couple  of  years  later,  perhaps  come 

back  to  be  the  Deputy  Director  or  Controller  or  the  head  of   i 

Administration  or  some  other  job  that  was  more  important,  in  ■ 


terms  of  resource  controls. 

Q     In  your  opinion,  was  there  anything  wrong  with  the 
idea  not  being  a  stepping  stone  for  someone? 

A     No.   Because  it's  quite  a  visible  position.   If 

somebody  wanted  to  go  back  overseas  again,  it  carried  a 

certain  eunount  of  ballast  by  having  been  the  Inspector 

General.   You  get  to  be  known  throughout  Washington, 

throughout  a  lot  of  parts  of  the  government,  and  then  it's 

very  hard  to  suddenly  reappear,  you  know,  ir 

land  be  the  station  chief,  as  your  twilight  assignment  : 
I  I 

for  your  career . 

Q     Isn't  it  also  a  problem,  unless  you  come  out  of 

the  DO,  it's  pretty  difficult  to  investigate  the  DO? 

A     No,  I  don't  think  so. 

ci-noaui  atrarus.  inc 





Q     The  DO  isn't  something  unto  itself,  in  many 

A     No.   I  don;t  see  that,  because  the  element  — 
basic  element  for  conducting  investigations  is  access  to 
the  personnel,  money,  and  program,  and  I  think  if  you  have 
the  access  to  those,  it's  fairly  well  established. 

Q     Well,  isn't  it  also,   if  you're  going  to  conduct 
an  effective  investigation,  the  capacity  to  have  some 
rapport  with  the  people  you're  investigating? 

A     Yes.   That's  a  factor,  but  I  guess  if  you  look 
at  that  on  a  scale  of  100,  the  rapport  is  probably  less 
important  than  access  to  the  program  records  and  the 
financial  records  and  the  personnel  records. 

Q     We  came  across,  in  our  investigation,  an  instance 
in  which  DEA  worked  with  CIA  on  a  project  —  the  Drug 
Enforcement  Adminstration .   When  you  were  ADDO^  I  guess  it 
would  have  been  called  DEA  at  that  point  too  —  what  was 
their  relationship  with  CIA? 

A     Well,  it  was  still  evolving  at  that  particular 
point  in  time,  because  you  have  to  go  back.   I  forget  what 
DEA  was  called  then. 

Q     It  was  Bureau  of  Narcotics  and  Dangerous  Drugs? 

cf-nMM.  HMaran.  inc. 



-       I 


263    I 

A     Drug  Control,  I  guess. 

Q     And  before  that,  it  was  the  Federal  Bureau  of 

A     You  know,  as  it  evolved.   Ajd  it  was  still 
evolving  in  my  time,  that  is,  the  relationship  and  the  scope. 
of  activity,  because  that  was  a  new  requirement,  really, 
and  initially  when  the  narcotics  problem  came  into  focus,    i 
the  Agency's  primary  responsibility  was  collection  of 
intelligence;  who  were  these  guys?  What  were  they  doing, 
and  so  forth?  Then  later,  came  a  point  in  time  when  there 
was  more  cooperation,  in  terms  of  trying  to  obtain 

And  therefore,  there  was  a  greater  exchange  of 
operational  information  with  the  Drug  Enforcement  Agency. 
So  it  was  still  evolving  during  my  time. 

Q     Had  it  evolved  to  the  point  where  the  DEA  would 
join  in  an  operation  with  CIA?   Their  agents  actively 

A     I  can't  reall.   You  better  give  me  a  better 
definition  of  what  you  see  as  a  joint  operation.   I  think 
maybe  I  can  tell  you. I 

[-OMUL  lucnvn.  inc 




£Aj/sd      /J 





Q     Are  you  familiar  with  the  Third  Agency  Rule? 

A     Yes . 

Q     Could  you  articulate  that  for  me,  please. 

A  Well,  the  Third  Agency  Rule  is  that  the  CIA  obtains 
information  from,  let's  say,  the  FBI.  It  is  not  to  pass  that 
information  to  DEA.   It  was  not  coordinating  it. 

Q     In  other  words,  notifying  FBI? 

A     No.   You  could  not  get  information  from  the  FBI  and 
have  that  information  come  to  the  CIA,  and  the  CIA  willy-nilly 
then  give  that  to  DEA. 

Q     Now,  that  process  of  notifying  FBI,  is  that 
actually  a  process  of  getting  their  approval? 

A     Right. 

Q     It's  not  simply  notice;  you  actually  have  to 
approve  it;  is  that  correct?  / 

A     You  have  to  discuss  it  with  them,  and  a  lot  would 
depend  on  what  operational ,  and  you  have  to  get  their 
approval . 

Q     Let  me  share  with  you  one  of  the  frustrations  of 
an  investigation.   We  have  found  that  the  Third  Agency  Rule 
applies  to  Congress  as  well.   We  run  into  instances  where 
we  can  get,  basically,  composite  documents  with  the  CIA, 

:[-raDUAL  ■ERMTtn.  inc 





blanking  out  what  maybe  the  FBI  has  told  us,  and  the  FBI 
giving  us  the  same  document  in  their  folder,  blanking  out 
what  the  CIA  has  told  them.   Together,  we  have  a  complete 

That  has  struck  at  least  some  of  us  as  having  some 
limited  logic. 

Would  you  have  any  position  on  how  the  Third 
Agency  Rule  might  apply  to  Congress? 

A     Well,  let  me  say  that  I  think  that  the  Third, 
Agency  Rule  is  a  good  rule.   It's  a  sound  rule  in  practice, 
in  terms  of  dealing  among  the  intelligence  and  security 
agencies  a)  within  the  government,  within  the  U.S. 
government  and  b)  with  foreign  services. 

So,  having  started  with  that  as  a  premise,  you 
have  the  special  problem,  in  terms  of  dealing  with  the 

Q Let '  8  leave  ^^^^^^^^^^^^^^^^^^^^^^^^^^^^H 

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^■but   say 
tbm  government. 

/A  I   think  you  got   a   special  case,    insofar   as    the 

Congress  is  concerned.      I  haven't  really  given  that  any 
thought  as  to  how  one  might  work  around  it.      Insofar  as 

ci-ftDOM.  ivoann.  inc 





the  relationship  between  the  agencies  within  the  government 
is  concerned,  I  think  the  Third  Agency  Rule  is  good  and  should 
be  adhered  to,  because  there  may  be  something  that,  when  the 
FBI  gave  you  this  information,  they  gave  you  perfectly  sound  ■ 
information,  but  how  that  information  is  acquired  or  was 
acquired  and  what  jeopardy  the  source  of  the  acquisition 
might  be  placed  in  by  being  given  further  dissemination  to 
SCTnebody  who  would  use  it  in  a  different  form,  can  only  be 
made  by  that  agency. 

And  if  you're  going  to  have  a  free  flow  of 
information,  I  think  you  have  to  honor  the  Third  Agency  Rule. 
How  you  solve  that  for  relations  with  the  Congress,  you  do 
have  a  special  problem.   I  don't  have  an  instant  answer.   I 
hadn't  thought  about  it. 

Q     I  just  have  one  more  line  of  questions  for  you. 
The  CIA  has  its  own  security  clearance  process; 
is  that  right?  ' 

A     You  mean  for  hiring  peop}j^?  ^ 

Q     Let's  say,  for  a  person  who  would  participate  in   j 
a  covert  action. 

A     Yes,  there's  a  clearance  procedure  for  that.   It's 
self-generator  procedure. 


ci-mauL  MratTun.  inc. 





Q     And  am  I  right  that  a  person  who,  say,  has  a 
security  clearance  with  the  Department  of  Defense,  would 
not,  ipso  facto,  have  a  security  clearance  with  CIA  to 
participate  in  a  covert  action?  ■ 


A     That's  generally  correct;  yes.  i 

Q     In  other  words,  the  CIA  would  also  clear  that 

person  into  its  operation? 

A     Depending  on  what  kind  of  a  role  they  were  playing,! 

and  so  forth. 

Q     And  do  you  think  that's  sound  practice? 

A     Yes. 

Q     Prudent? 

A     Yes.   You  have  to  know,  I  think,  depending  on  the 

role  they're  going  to  play.   That's  why  I  came  back  to,  you 

have  to  define  the  level  of  participation;  then,  how  much 

time  you're  going  to  spend  on  clearing  the  person. 

MR.  WOODCOCK:   Okay.   That  concludes  the  questions 

I  have  for  the  moment. 

THE  WITNESS:   Can  we  take  a  break? 



Q     Mr.  Shackley,  you  recall  when  we  were  last  together 

c-ftocML  laocms.  inc. 




269  ! 

I  asked  you  some  questions  about  Albert  Hakim  and  your 

circulating  him  within  the  CIA  back  in  the  1970s  as  a  possible 

sort  of  assistant  to  the  Agency. 

What  I'd  like  to  do,  if  I  could,  with  you,  is  to 

show  you  a  series  of  documents  here  which  we  have  received 

from  CIA.   First  let  me  ask  you  to  read  this  document,  which 

I  will  ask  the  reporter  to  mark  as  Deposition  Exhibit  No.  9. 

(Shackley  Deposition  Exhibit  9      ; 

identified.)  I 

MR.  WOODCOCK:   I'll  describe  it  for  you  the  record. 

It's  a  memorandum  for  record,  dated  August  5,  i976,  and 

signed  on  the  back,  "Theodore  G.  Shackley,  Associate  Deputy 

Director  for  Operations. 


Q     Now  Mr.  Shackley,  if  you  will  take  a  moment  to 

read  this,  it's  a  four-page  memorandum,  single  space,  so 

it  might  take  a  little  time,  but  I  would  ask  you  to  take   a 

moment  and  read  it  carefully. 

(A  pause.) 

First,  Mr.  Shackley,  have  you  had  an  opportunity 

to  review  Deposition  Exhibit  No.  9? 

A     Yes.   I  have  read  that  menorandum. 


270   I 

Q     Before  we  get  into  the  substance  of  it,  is  that 
your  signature  on  the  last  page,  page  4? 

A     Yes,   That's  what  it  looks  like. 

Q     And  I  gather  that's  a  memorandum  that  you  yourself  ; 
prepared;  is  that  correct? 

A     Yes.   That's  clearly  the  kind  of  thing  I  owuld  have 

done,  and  I  think  it's  a  reasonably  accurate  thing  of  what   I 


I  told  you  I  did  do  the  other  day.  j 

Q     Right   Now,  let  me  go  through  the  memorandum  with 

you,  if  I  may,  because  there  are  some  points  in  it  that  I'd 

like  to  see  if  you  can  expand  on. 

The  memorandum  gives  under  the  heading  "Background,* 

on  the  first  page,  there's  a  reference  in  the  first  sentence 

there  that  during  the  May  to  August  1976  time  period,  you 

had  collected  "numerous  references"  on  Albert  Hakim. 

As  you  recall,  what  were  these  references  you 

were  picking  up  during  that  period  of  time?  j 

A     You  know,  I  don't  really  know.   This  is  a  long 

time  ago.   This  is  1976.   I  know  that's  what  it  says,  but   ; 

those  words  don't  bring  any  specific  details.   Obviously, 

whatever  I  had,  I  wrote  in  there  at  the  time,  given  the 

way  this  unfolds.   But  I  can't  recall  what  that  had 

zt-naaut.  taontn.  inc 





reference  to. 

Q     You  were  introduced,  I  think  you  testified,  to 
Mr.  Hakim  by  Ed  Wilson;  is  that  correct? 

A     Yes,  I  was. 

Q     Was  Wilson  the  source  of  these  references,  do  you 

A     I  know  he  introduced  me  to  him,  but  that's  my 
main  recollection  of  the  thing. 

Q     Let  me  ask  you  this,  a  different  kind  of  question. ' 
Your  present  inability  to  recall  would  suggest 
that  it  might  have  been  prudent  to  set  out  the  numerous 
references  at  the  time. 

Would  that  be  the  ordinary  thing  to  do,  when  you're 
putting  a  memo  like  this  together,  to  say  "I  have  had 
references  on  so-and-so  from  the  following  sources?" 

A     No.   That  would  be  sort  of  a  judgment  call, 
depending  on  what  you  saw  coming  out  of  this  particular 
thing,  as  I  think  I  told  you  the  other  day,  and  this 
c«rtainly  reaffirms  my  own  memory  of  the  thing.   I  had  a    ■ 
meeting,  I  came  back,  ajid   I  wrote  up  what  I  thought  was  a   ! 
fulsome  report  and  put  it  into  the  system. 

Q     Now,  there ' s  also  a  reference  —  let  me  go  down 

•a-mOM.  KPovTus.  inc. 





the  page  here.  We're  still  on  page  1,  under  the  heading    ; 

of  "Commercial  Structure." 

A     Right .  i 

Q     It  says  "Mr.  Hakim  is  involved  in  a  number  cf 

commercial  enterprises." 

Do  you  recall  what  series  of  commercial  enterprises 

would  have  been?  | 

MR.  MC  KAY:   You  mean  beyond  what  is  mentioned? 

MR.  WOODCOCK:   Yes.   In  addition  to  anything      I 

that's  mentioned.  ! 

THE  WITNESS:   Let  me  just  reread  that  again. 

(A  pause.)  ' 

THE  WITNESS:   No.   The  way  it's  written,  I  assume 

that  he  has  a  number  of  commercial  enterprises,  and  it 

goes  on  to  discuss  two  of  them  here.  | 


Q  '   Do  you  recall  whether  there  would  have  been  any   | 

that  you  would  have  known  of,  using  that  term,  that  you 

didn't  put  down?  I 

A     No.   I  wouldn't  have  thought  so.   I  just  have  no 

way  of  dredging  that  out. 

Q     Let  me  ask,  if  you  would  turn  to  page  2  of 

ct-naouL  icmms.  inc. 




273   I 

Exhibit  9,  |Under  "Type  of  Business." 

The  first  sentence  there,  you  say  "Mr.  Hakim  has 
let  it  be  known  that  he  is  currently  in  the  process  of 
selling  the  RDJ-9000  security  system  of  Stanford  Technology 
Corporation  to  Iran." 

When  you  say,  "Let  it  me  know,"  do  you  recall 
whether  that's  something  he's  telling  you,  or  is  this 
coming  to  you  from  another  source? 

A     The  way  this  is  written,  I  assume  I  got  it  from 
him,  that  he  said  that  that's  what  he  was  doing. 

ct^noouL  MPwras.  inc 




Q     Now,  dropping  down  to  number  2,  the  first 
sentence  there. 

"Mr.  Shackley's  contacts  have  indicated 
Mr.  Hakim  is  quite  anxious  to  play  a 
pivotal  role  in  the  Iranian  purchase  of 
American  technology." 
What  contacts  are  we  talking  about?  Do  you 

A     No,  I  don't,  but  I  assume  that  that's  probably 
what  came  out  of  the  discussions  with  Wilson.   That's 
certainly  one  of  them.   But  I  don't  know.   It's  plural, 
more  than  one.   That's  the  only  one  that  comes  to  mind  at 


cc-rtaoAi  MM«Ttn.  inc. 




this  point  in  time. 

Q     Let  me  put  this  for  this  particular  time  period. 
Is  there  anyone  else  that  you  associate  with 
Mr.  Hakim  at  this  point,  other  than  Ed  Wilson? 

A     There  obviously  must  have  been  somebody  else  I 
was  talking  to,  because  I  used  the  plural  here,  but  I  can't 
~  nothing  comes  to  mind.   I  met  an  awful  lot  of  people  all 
over  the  world,  and  it's  hard  to  put  this  —  I  mean,  this 
refreshes  my  memory,  and  I'm  surprised  that  my  memory  was 
as  accurate  at  it  turned  out  to  be. 

Q  Let  me  ask  you  about  a  phrase  that  you  have 
employed  in  paragraph  number  2,  on  page  2,  the  one  on 
"Assessment."   it  says: 

"Mr.  Hakim  is  casting  about  for  contacts 
in  the  U.S.  government  with  whom  he  can 
find  a  mutuality  of  interests   concerning 
Iranian  attempts  to  procure  hardware  in 
(the  United  States." 
That  phrase,  "mutuality  of  interests,"  what  did 
you  mean^by  that? 

A     Well,  that's  a  phrasi  that  would  mean  that 
somebody  would  provide  intelligence  or  information  and  keep 

ct-fDOUi  Hfwrtn.  inc 





the  U.S.  government  posted  on  what  they  were  doing,  in  return 
for  which  he  would  be  told,  you  know,  "We  got  a  system  up 
here."  "Hey,  that  system  can't  be  sold,  and  you're  wasting 
your  time  trying  to  sell  that  system." 

Q     Okay.   Explain  that  to  me.   Mr.  Hakim,  if  I 
understand  what  you're  saying,  is  considering  a  proposal  to 
sell  a  certain  system  to  Iran? 

A     Right. 

Q     Now,  again,  explain  what  it  is  that  is  in  his 
interest?  Why  is  it  in  his  interest  to  assist  us? 

Q     It's  in  his  interest  to  see  if  that  is  a  system 
that  can  be  sold.   In  other  words,  his  choices  are  to  go 
to  the  Munitions  Control  Board,  as  an  example,  and  to  file 
a  license,  and  he  might  spend  a  year  or  two  trying  to  get 
that  license  through  and  get  approval,  or  at  the  end  of 
two  years,  after  he's  invested  all  this  time  and  effort, 
find  out  that  he  can't  sell  it  or  isn't  going  to  sell  it, 
there's  a  U.S.  policy  against  selling  it.   And  it's  not 
unccnunon  for  people  to  try  to  strike  a  deal  with  the  U.S. 
government,  where  they  say,  "Look,  I  want  to  tell  you  what 
I'm  doing,  but  don't  let  me  spin  all  my  wheels  here  forever 
pursuing  a  project  that  doesn't  make  any  sense." 

CE-mOAL  ll(ra«TUS.   INC 





Q     And  what  role  would  CIA  play  in  making  Mr.  Hakim 
wiser  than  he  would  be  otherwise? 

A     Well,  I  think  about  the  only  thing  —  first  of  all, 
he'd  have  to  check  all  that  out  to  see  whether  there  was  a 
policy  for  not  selling  something,  and  if  there  was  a  policy  i 
for  not  selling  it,  and  it  was  not  a  secret,  you  might  say 
"to  him,  "Look,  I  don't  think  you're  going  to  sell  that.   I 
don't  think  you  can  sell  that."  ' 

Q     And  that  would  be  someone  in  CIA  would  convey  that  ; 
information  to  him? 

A     Yes. 

Q     Let  me  bring  you  down  to  the  next  paragraph,  the 
one  numbered  3  on  page  2 . 

That  starts  out,  "Mr.  Hakim  was  transiting 
Washington  on  August  4." 

A     Right.  ; 

Q     How  is  it  that  you  knew  Mr.  Hakim  was  transiting 
Washington  on  August  4? 

A     I  really  don't  know  at  this  day  and  age,  how  I     j 
knew.  When  did  I  have  the  luncheon  with  him? 

Q     I  believe  it's  contained  in  that  paragraph? 

A     Okay.   I  met  with  him  for  lunch  on  4  August.   I 





knew  he  was  transiting.  The  person  who  introduced  me  to  him 
was  Wilson,  so  I'd  have  to  assume  from  that,  that  I  probably 
learned  of  that  from  Wilson. 

Q  Up  to  this  point,  up  to  this  luncheon  on  August  ; 
4,  1976,  you  had  not  yet  met  Mr.  Hakim;  is  that  correct? 

A     That's  correct. 

Q  So  at  that  luncheon  that ' s  described  in  paragraph  I 
3  at  the  Jockey  Club,  you  actually  came  face  to  face  with  I 
him;  is  that  correct? 

A     Right. 

Q     At -that  luncheon  —  I  don't  think  I  covered  this 
in  your  prior  appearance.   If  I  did,  then  please  forgive  me. 
But  at  that  luncheon,  it  was  you  and  Mr.  Hakim  and  no  one 
else;  is  that  correct?   Or  was  there  someone  else? 

A     I  really  don't  remember  that  clearly.   It's 
possible  that  Wilson  was  there.    I  can't  fix  him  definitely, 
but  I  can't  exclude  him.  I 

Q  What  I'm  trying  to  get  to  —  I  think  you  can  see  j 
my  problem.  ■,  How  was  the  introduction  made?  ■ 

A     Clearly,  Wilson  introduced  me  to  him.   Whether  he 
stayed  for  the  luncheon  or  was  there  or  not,  I  cannot 
remember.   I  have  trouble  with  that.   I  cannot  say  with 


t-naOAL  Mforrus.  inc 




certainty  one  way  or  the  other. 

My  guess  is,  he  probably  was  there,  but  it's 
strictly  a  guess. 

i-naauL  MwtrtM.  inc. 








Q     Do  you  recall  Aether  you  had  developed  a  thought 
in  Mr.  Hakim's  case,  to  that  degree  of  specificity? 

A     No.   What  I  did  was,  I  went  out,  met  the  fellow 
and  came  back,  wrote  a  rather  fulsome  report,  put  it  in  the 
system  and  nothing  happened.   In  other  words,  as  I  told 
you  the  other  day,  I  probably  got  some  correspondence.   My 
recollection  of  what  happened  is,  people  came  back  and  said 
they  simply  weren't  interested  in  what  we  had  to  offer,  that 
<^^ey  had  contacts  that  were  better  than  what  he  was  suggesting. 

.  iwonaj.  INC. 







Q     Now  at  this  time,  did  you  yourself  know  either 
Secord  or  von  Marbod? 

A     Yes.   This  is  '76.   I  testified  earlier  that  I 
met  him  in  Laos.   The  Vietnam  War  was  over.   Yes.   By  then, 
I  knew  von  Marbod. 

Q     Let  me  back  up.   Do  you  recall  how  it  was  you  would' 

have  know  where  these  two  individuals,  Secord  and  von  Marbod,' 

were  at  that  time? 

A     They  were  prominent  in  the  situation  in  Iran.   Their 
names  were  in  cable  traffic  all  the  time,  so  I  certainly  knew 
that  that's  where  they  were. 

Q     As  I  recall  your  testimony  —  and  correct  me  if 
I'm  wrong  —  after  you  parted  company  with  General  Secord 
in  Laos,  you  had  very  little  contact  with  him  subsequently; 
is  that  correct? 

A     Yea.   Basically,  social  contact,  if  we  were  both 
acmmih^ze   at  the  same  time.   I  don't  recall  all  of  his 
assignments,  where  he  went,  but  there  was  a  long  period  of 
time  that  we  weren't  in  any  place  where  our  paths  crossed.    ! 

Q     Do  you  recall  ever  meeting  him  in  Ed  Wilson's      i 






A     No,  I  don't.   I  don't  recall  meeting  him  in  Ed 
Wilson's  company.   I  have  no  recollection  of  that. 

Q     And  the  same  for  Mr.  von  Marbod?   Do  you  recall 
ever  meeting  him  in  Ed  Wilson's  company? 

A     NO,  I  don't  have  any  recollection  of  meeting  him 
with  —  nothing  jumps  out.   I  have  known  von  Marbod  for  a 
number  of  years. 

•^■nouM.  MEfoartn.  inc. 







that  when  I  came  'away  from  this,  and  I  wrote  this,  I  obviously 
had  the  impression  he  had  been  on  the  periphery  or  knew  how 
these  functions,  and  so  forth. 

Q     And  that  in  particular,  he  had  some  relationship 
with  French  and  British  arms  sales? 

A     Yes .   On  the  periphery  of  whatever  was  going  on  at 
that  time.   I  have  no  way  of  recalling  that. 
Q     You  recall  no  particulars  of  that? 
A     No. 

MR.  MC  KAY:   Mr.  Woodcock,  do  you  know  what  the 
blacked  out  line  is  in  paragraph  6? 

MR.  WOODCOCK:   No,  I  don't. 

Let  me  have  this  marked  as  the  next  exhibit,  number 
10,  and  I  will  ask  you  to  take  time  and  read  it. 

(Shackley  Deposition  Exhibit  10 
MR.  WOODCOCK:   Let  me  identify  it  for  the  record. 

{  This  is  a  memorandu,  dated  August  16,  '76.   It's 

three  pages,  single  spaced,  and  appears  to  bear  the  signature 

of  Theodore  G.  Shackley,  on  the  third  page. 

The  subject  is  "Mr.  Albert  Hakim,  Iranian  National 

and  Importer/Exporter."  '   'v.^-' 





Take  a  minute,  if  you  would,  to  read  that. 
(A  pause.) 

Q     Now,  again,  as  with  Deposition  Exhibit  No.  8,  on 
Deposition  Exhibit  No.  10,  is  that  your  signature? 

A     Yes,  that  certainly  looks  like  it. 

Q     And  have  you  had  a  chance  ot  review  that? 

A     Yes,  I  have. 

Q     Let  me  ask  you  just  a  few  questions  about  that. 
From  the  introductory  sentence  of  that  memorandum  on  page  1, 
it  appears  that  14r .  Hakim  is  making  yet  another  trip  to 

Is  that  the  way  you  read  that?   That  is  separate 
from  the  one  where  you  met  him  in  August  4? 

A     Yes,  I'd  say  that's  another  trip.   It  certainly  looks 
like  it. 

Q     Now,  it's  not  clear  from  the  memorandum,  but  do 
you  recall  whether  you  met  him  on  the  second  trip? 

A     I  don't  have  any  recollection  of  meeting  him,  and 
this  doesn't  say.  that  I  did  meet  him.   I  think  if  I  had  met 
him,  I  probably  would  have  said  somewhere,  unless  we  have 
another  memo  that  says  that  I  did  meet  him  or  something,  but 





normally,  i  think  the  information  would  have  been,  if  I  met 
him,  that  I  i^t  him  at  such-and-such  a  place. 

Q     Now,  you  brought  Mr.  Hakim  to  the  attention  of 
George  Cave^^^^^^^^^^^^^^^^V  Do  you        whether, 
you  brought  this  to  his  attention  that  anyone  else  was  present!? 

A     No,  I  don't. 

Q     Do  you  recall  bringing  this  to  his  attention?       i 


A     No.   This  refreshes  my  memory.   I  have  forgotten    1 
all  about  this.   I  know  George  Cave,  and  I  think  I  told  you 
the  other  day,  I  didn't  remember.   Nothing  popped  out  at  that  ', 
time  when  we  were  discussing  George  Cave,  but  I  do  know  him. 
It  says  I  talked  with  him,  so  I  did  talk  with  him,  but  I  don't 
recall  the  meeting. 

Q     You  don ' t  have  an  independent  recollection? 

A     No,  I  don't. 

Q     Do  you  recall,  having  read  this.  Cave  having  any 

involvement  —  an  independent  recollection  of  Cave  having     j 

any  involvement  with  this  at  all? 

A     NO.   And  this  is  perhaps  one  of  20  or  30  such 

meetings  I  might  have  had  during  the  course  of  any  particular 

day  dealing  with  various  items.   Z  just  don't  recall  discussir|g 

this  with  Cave,  other  than  that's  what  it  says  there,  and  I 




293  I 

have  to  accept  what  it  says  there  is  correct. 

Q     Partly  through  the  sentence,  it  notes,  Tom  Clines 
was  then  DDO  Training  Officer,  had  also  met  Mr.  Hakim  in  a 
social  context. 

Do  you  recall  how  it  is  that  you  knew  that  at  that 

A     No,  I  don't.   But  obviously,  I  knew  it  somehow,  or  . 
it  cmme  out,  because  it's  in  there. 

Q     Having  seen  that,  is  it  possible  that  he  is  one  of  \ 
the  contacts  you're  referring  to  in  your  earlier  memoranda, 
who  was  giving  you  information  on  Mr.  Hakim? 

A     I  have  no  specific  recollection  of  it,  but  I  can't 






exclude  it,  you  know,  that  he  was  one  of  the  people.   My  main 
recollection  is,  I  was  introduced  to  this  guy  by  Ed  Wilson. 
That's  the  main  thing  that  sticks  out  in  my  mind,  and  it's  been 
a  long  time  ago. 




Q     Let  me  ask  you  this.  You  have  had  an  opportunity 
now  to  read  to  the  end  of  this  deposition,  Exhibit  No.  10. 
As  the  Associate  Deputy  Director  of  Operations,  was  it  usual 
for  you  to  get  involved  in  this  kind  of  detai] 

A     It  could  be,  yes.   I  mean,  a  lot  of 
proposals  were  discussed  with  me,  but  as  I  recall,  this  one, 
for  some  reason,  never  went  anywhere.   As  I  recall,  this 
thing  all  fell  apart.   You  probably  have  an  additional  track 
in  here. 

Q     I  will  show  that  to  you  in  a  moment,  but  on  that 
question,  you  have  looked  at  these  two  memoranda  in  detail, 
and  they  show  a  personal  interest  on  your  part  in  this  deal. 
Is  this  unusual  to  you,  or  is  this  typical  to  you 
thmt   you  would  have  gotten  involved   in  this  kind  of  detail? 

MR.  MC  KAY:  I'm  going  to  object  to  the  question, 
in  that  it  talks  about  a  personal  interest.  He  is  involved 
in  his  office  capacity,  if  that's  what  you  mean. 






Q     Excuse  me.   Not  a  personal  interest  separate  from 
your  official  duties.   I'm  not  implying  that,  but  that  you 
personally  are  taking  a  lead  in  this.   That's  what  I  mean  by  ; 

A     No,  that  would  not  be  unusual.   I  meet  somebody,  I 
put  a  memo  into  the  system.   I  checked  on  it.   It  would  also  ; 

be  quite  common  for  me  to  look  at  some  ceible  traffic  coming 

Q     So  that  would  be  something  that  you,  yourself,  might 
do  as  opposed  to  say,  to  somebody  who  is  a  subordinate,  "Look, 
we  have  ccnne  across  this  interesting  character.   You  go  out 
and  meet  him,  and  you  make  the  judgment  on  him." 

That's  something  you  yourself  would  do  as  AODO? 

A     Yes .  i 

Q     Do  you  know  whether,  in  following  that  kind  of 
practice,  it  would  be  unusual  for  an  ADDO,  or  is  this  pretty 
much  standard  in  your  experience  for  an  ADDO  to  get  involved 
in  that? 

A     No,  I  don't  think  it's  unusual.   It  depends  on  the 





times  and  the  events  and  the  areas  of  interest.   There  are 
predecessors  in  that  job  that  did  a  lot  in  the  covert 
action  activity  that  were  very  much  interested  in  various 
aspects  of  covert  action  and  played  a  very  action  role. 

MR.  WOODCOCK:   Now,  I  have  some  cable  traffic  that  : 
resulted  from  your  two  memoranda,  and  I  won't  burden  you  with 


The  first  ccUale,  which  is  dated  August  18,  "76,     '■ 

based  on  the  inquiries  that  were  generated 

by  the  interest  in  Mr.  Hakim,  giving  a  position 

on  the  proposal  to  use  Mr.  HaUcim>  let  me  have  it 

marked  as  Exhibit  No.  11. 

(Shackley  Deposition  Exhibit  11 


MR,  WOODCOCK:   And  I'll  ask  you  to  take   a  moment 

to  read  it. 

(A  pause.) 

THE  WITNESS:   Do  you  have  the  other  one,  because 

this  doesn't  make  sense?   Do  you  have  the  90015?   Obviously,  \ 

sc^nething  went  out. 

MR.  WOODCOCK:  Well,  there  are  two  that  went  out 

I  wasn't  going  to  burden  you  with  them.   Let  me  have  them 





marked  as  exhibits,  and  you  can  read  these,  the  predecessor 

The  first  cable,  number  900015,  followed  by  900016 
Both  are  dated  August  17,  1976.   They  were  sent  out  within  a 
minute  of  one  another.   They  are  companion  cables. 

I'll  have  900016  marked  as  Deposition  Exhibit  12 
and  then  900016  marked  as  Deposition  Exhibit  No.  13. 

(Shackley  Deposition  Exhibits  12  and  13 
Q     Now,  Mr.  Shackley,  have  you  had  an  opportunity  to 
read  each  one  of  these  exhibits? 
A     Yes. 

Q  I  was  really  interested  in  Deposition  Exhibit  No. 
11,  which  provides  the  rationale  which^^^^^^^^Bmade  for 
rejecting  the  proposal  to  use  Mr.  Hakim. 

Is  that  rationale  consistent  with  your  recollection 
of  what  happened  here? 

A     I  think  I  told  you  the  other  day,  I  just  remembered 
this  was  turned  down  by  the  field.   I  didn't  recall  the 
rationale  when  we  talked  about  it  the  other 





But  this  also  shows  there 
was  some  concern  about  Stanford  Technology's  reputation  in 
this  field.   It  had  escaped  me,  so  this  provides  clarifying 

Q     Do  you  recall  whether  you  received  this  cable? 
Do  you  have  an  independentrecollection  that  this  information 
came  to  your  attention  in  August  of  1976? 

A     No.   I  don't  have  any  independent  recollection 
from  it.   Analyzing  what  I  can  see  on  this  thing,  it  does  not 
appear  that  I  got  a  copy  of  it.   But  that's  by  deduction 
rather  than  by  memory.   I  may  be  able  to  unravel  this.   Just 
give  me  a  minute  and  let  me  look  at  this. 
(A  pause. ) 

No,  I  can't  tell.   I  thought  I  could  tell  from 
this,  but  I  can't. 

Q     In  your  August  16  memorandum,  I  think  it  was,  you 
charged  Mr.  Cave  and  Mr.  Clines  with  drafting  the  cable 
traffifc  to  make  the  proper  inquiry 

Do  you  recall  either  one  of  them  coming  back  to  you 
and  saying  this  is  what  we've  got;  it  isn't  going  to  fly,  or 
they're  not  interested  for  the  following  reasons? 





A     No.   The  only  recollection  I  have  of  this  thing  is  ■ 
that  it  fell  apart.   It  didn't  go  anywhere.   That's  all  I 
remember  of  it. 

Q     Do  you  recall,  independent  of  this  cable,  coming    | 

cross  information  that  either  Albert  Hakim  or  Stanford 

Technology  had,  I  think  what  the  cable  calls  "an  unsavory 

reputation"?  ■ 

A     No.   I  know  that's  what  this  says,  but  I  don't 

recall  that  coming  up  with  it. 

Q     You  don ' t  recall  getting  that  information  from  any 
of  the  contacts  that  you  had  originally  made  in  Mr.  Hakim's 
name  available  to  you? 

A     No ,  I  don ' t . 

Q     Subsequent  to  these  events,  this  August  '76  period, 

do  you  recall  at  any  time  other  than  right  now,  coming  across 

information  that  either  Albert  Hakim  or  his  Stanford 

Technology  Group  had  acted  in  an  unethical  manner  with  the   i 

Imperial  Iranian  Air  Force? 

A     No.   I  think  the  only  thing  I've  seen  —  or  seen 

any  time  since  —  I  think  I  saw  some  newspaper  articles 

recently  that  he  was  involved  in  some  sort  of  a  sale  of 

eunmunition  or  something,  but  that  was  in  some  newspgiper  article 





I  have  seen  in  the  last  perhaps  year  or  so. 
Q     So,  other  than  public  sources  — 
A     No,  I've  not  aware  of  it. 

MR.  WOODCOCK:   Okay.   I  don't  have  any  further 
questions  on  this.  ' 

MR.  HOLMES:   Okay.   Let  me  just  follow  on  the  last 
question.  I 



BY   MR.    HOLMES:  '< 

Q     The  person  that  he  was  supposed  to  be  involved  in 
the  ammunition  sale  happened  to  ^^^^^^^^^^^^^^^^^B  ^°^ 
had  never  heard,  up  until  the  time  of  these  hearings  that 
he  had,  in  fact,  been  bribing^^^^^^^Hthrough  the  early 

A     No,  I  have  never  heard  that.   The  first  time  I  ever; 

knew  he  was  actually  involved  in  selling  ammunition,  as  far 

as  I  can  remember,  was,  when  I  saw  that  in  the  newspapers.    j 

Q     He  was  actually  selling  ammunition  and  primarily 

selling  an  opportunity  to  build  an  ammunition  plant  in  Iran 

for  a  U.S.  company,  and  as  part  of  that  was  enriching 

in  a  Swiss  bank  account.   You  had  never  heard  up 

until  these  hearings  that  the  very  person  he  was  planning  to 




infiltrate  had,  in  fact,  already  been  bribed  by  him? 

A     No.   I  can't  even  make  those  match  up,  because 
what  I  remember  reading  is  a  very  short  story  in  one  of  the 
newspapers,  and  I  don't  even  remember  if^^^^^^^^^Hname 
was  in  that  story, that  said  he  was  involved  in  a  sale  of 
ammunition  to  the  Iranians,  and  there  had  been,  you  know, 
bribes  involved  in  that  sale.   And  I  can't  even  remember  when 
that  was . 

Are  you  saying  during  the  time  of  this  hearing?   I  | 
don't  even  remember  that.   It's  been  within  the  last  six 
months  or  year  that  I've  seen  that,  but  I  can't  define  it 
more  closely.   I  don't  recall ^^^^^^^^^^Kname   being  in  the 
story  that  I  saw. 

Q     Have  you  had  any  contact  with^^^^^^^Hat  all 
since  1976? 

A     Why  are  you  saying  "since  1976"?  I  never  met 

Q     Well,  you  had  some  conflict  with  his  name  in  '76, 
because  it's  in  your  memo. 

A     Yes.   But  that  doesn't  mean  contact.   I  think  we're 
talking  past  each  other.   I  do  not  know^^^^^^^^l  I  don't 
recall  ever  having  seen  him  or  met  him,  and  if  you  use  that. 





in  the  course  of  any  day,  hundreds  of  names  came  across  my 
desk  in  the  traffic. 

[at  any  time 

Q     Do  you  recall  talking  withj 
since  these  memos  in  ' 76? 

A     No.   As  a  matter  of Tact,  the  only  time  I  remember 
anything  else  coming  up  about^^^^^^^^^Bwas  some  newspaper 
guy  called  me  one  day  and  asked  me  if  I  knew  where 
was.   I  think  he's  alive,  in  the  United  States,  based  from    | 
this  inquiry  that  I  got.  i 

Q     But  you  don't  know  where?  ! 

A     I  have  no  idea. 

Q     Have  you  ever  been  present  when  Wilson  and  Secord 
discussed  rescuing^^^^^^^ffrom  Iran  after  the  fall  of  the 

A     No,  I  don't  recall  any  such  conversation.   You  know, 
it's  not  the  kind  of  conversation  that  —  in  what  year? 

Q     Sometime  after  the  fall  of  the  Shah  in  '79.        j 

A     No.   In  '79?   No. 

Q     After  that? 

A     No. 

Q     Do  you  recall  any  discussion  for  bringing  any 
Iranian  out  of  Iran  after  the  fall  of  the  Shah? 





A     Remember,  I  retired  in  '79.   The  fall  of  the  Shah 
was,  I  think,  after  I  retired.   I  just  can't  remember  when 
the  Shah  fell.   I  retired  in  August  of  '79,  and  I  think  the 
Shah  ~ 

MR.  WOODCOCK:   I  think  he  had  left  the  country  by 
then.   I  think  he  left  sometime  in  early  1979. 

THE  WITNESS:   Okay.   But  by  then,  if  he  left  in 
early  '79,  I  was  not  in  a  job  where  that. would  have  been  a 
topic  for  discussion  with  me. 

Q     I'd  still  like  an  answer  to  the  question. 

A     I'm  answering  it. 

Q     Whether  you  heard  such  a  discussion? 

A     I  had  no  reason  to.   I'm  trying  to  place  myself 
chronologically  in  the  sequence  of  where  I  was.   In  '79,  I 
wasn't  in  a  job  where  I  would  have  access  to  that  kind  of 
information,  where  it  would  normally  be  discussed  with  me. 
I  wms  in  an  entirely  different  kind  of  a  job,  and  I  have  no 
recollection  of^^^^^^^Hbeing  a  subject  of  discussion. 
I  wasn't  consulted.   Nobody  asked  me  about  him.  \ 

Q  During  the  time  of  the  investigation  of  Secord  and  | 

Wilson  and  others  in  relation  to  their  dealings  in  the  Mideast, 





do  you  recall  any  discussion  about  Secord's  use  of  an  airplane 
purchased  by  Wilson  here  in  the  United  States? 

A     Yes,  I  think  that  came  up  in  some  of  the  questioning 
of  me.   I  know  there  was  an  airplane,  and  I  know  from  these 
questions,  and  so  forth,  that  Secord  flew  the  airplane. 

Q  Would  I  be  presuming  too  much,  if  I  presumed  that 
clients  may  have  discussed  this  topic  with  you  since  he  was 
alleged  to  have  flown  with  Secord  in  the  plane? 

A     No,  I  don't  recall  that  coming  up  with  conversations 
with  Clines.   My  recollection  of  that  —  and  this  was  a 
series  of  questions  that  were  put  to  me  by  an  investigator 
at  that  time. 

Q  You  don't  have  any  recall  of  any  discussion  about 
it  with  principals,  then;  is  that  what  you  are  saying? 

A     I'm  trying  to  give  you  an  answer,  and  I  think  I'm 
telling,  you  that  I  don't  recall.   My  recollection  is  that  I 
was  asked  about  this,  and  I'm  aware  there  was  an  airplane, 
but  my  memory  of  it  is  that  this  came  from   questioning 
about  others  who  were  playing  the  role  that  you ' re  playing . 

Q     So  you  did  know  about  it  before  you  were  asked 
about  it?  I 

A     No,  I  have  no  recollection  of  being  aware  of  that.  1 





MR.  HOLMES:   That's  all.   We  can  meet  after 

Off  the  record. 

(Whereupon,  at  1:05  p.m.,  the  taking  of  the 
deposition  was  recessed,  to  reconvene  at  2:10  p.m.,  this 
same  day . ) 






(2:10  p.m.) 

resumed  the  stand  and,  having  been  previously  duly  sworn, 
was  examined  and  testified  further  as  follows: 
EXAMINATION  (Continued) 
Q     You  understand  you  are  still  under  oath? 
A     Yes. 

Q     This  afternoon,  we  are  going  to  s}cip  around  a  lot, 
and  if  we  hit  the  same  general  point,  obliquely,  several 
times,  you  will  understand  why,  and  hopefully,  we  will  be 
able  to  move  along  a  little  more  rapidly. 

You  mentioned  Mr .  Robinette  the  last  time  you  were 

Could  you  tell  me  the  history  of  your  association 
with  Mr .  Robinette? 

A  My  memory  is,  I  knew  him  for  years  and  years  in 
the  Agency.  I  can't  tell  you  when  1  first  met  him  in  the 
Agency.   He's  an  old-time  career  employee,  and  so  was  I. 

Q     Have  you  ever  had  any  association  with  him  outside 





the  agency? 

A     Social  contact.   Talked  to  him  periodically. 

Q     No  business  contact? 

A     No.   I  think,  at  times,  we  talked  about  risk 
analysis  business,  investigative  activity  and  so  on,  but  we 
never  did  any  real  business. 

Q     Have  you  ever  spoken  with  him  about  his  activities 
during  1986? 

A     I  talked  to  him  in  the  context  of  the  Avirgnan- 
Honey  lawsuit.   I  remember  talking  to  him  sometime  about  the 
Avirgnan-Honey  case,  yes. 

Q     What  about  it? 

A     You  know,  what  did  he  know  about  it  and  trying  to 
figure  out  what  he  had  been  looking  at,  if  he  had  been  looking 
at  it.   You  know,  he's  a  professional  investigator,  has  worked 
for  a  lot  of  companies  at  various  times  that  had  investigated 
resources,  and  I  wondered  whether  he  knew  anything  about  this 
particular  group. 

Q     Did  he  ever  work  with  Ed  Wilson,  do  you  know? 

A     Not  that  I  know  of .  ■ 


Q     What  did  he  tell  you  about  what  he  knew  about      ■ 
the  lawsuit?  I 



A     Basically,  what  he  told  me  was,  this  suit  had  been 
filed,  what  I  already  knew,  that  the  majority  of  the  people 
were  not  linked  together  by  any  common  thread.   We  talked 
about  tracking  down  some  depositions.   There  are  some 
depositions  by  various  people  who  are  involved  in  that  suit, 
that  were  taken  in  Costa  Rica,  and  so  forth,  or  in  the  United 
States.   He  was  going  to  track  them  down,  and  so  was  I. 

Q     Was  anything  else  said  between  the  two  of  you  about 
his  activities  in  Central  America  in  '86? 

A     Not  that  I  can  recall.   Everything  was  focused 
really  on,  basically,  this  lawsuit. 

Q     Did  you  have  any  idea  that  he  was  doing  any  work 
on  the  home  of  Oliver  North? 

A     No,  I  didn't.   I  don  t  think  that  ever  ceuae  up  in 
any  conversation  with  him. 

Q     Did  you  know  Mr .  Casey? 

A     I  met  him  on  one  or  two  occasions . 

Q     How  did  that  occur? 

A     I  was  at  a  dinner  party  where  he  was  a  speaker.   I 
remember  meeting  him  under  those  circumstzmces . 

Q     Was  that  the  only  meeting  you  had  with  him? 

A     There  may  have  been  two  similar  type  things,  where 





he  was  the  guest  speaker  at  a  small  group  that  I  was  at. 

Q     Did  you  ever  dicuss  policy  with  him? 

A     No,  I  had  no  reason  to  discuss  policy  with  him. 

Q     Did  you  ever  discuss  with  any  person  a  potential 
idea  for  a  business,  the  name  of  which  was  to  be  International 
Security  Systems  Limited? 

A     International  Security  Systems?  No.   Could  you 
tell  me  any  more  about  what  you're  trying  — 

Q     My  understanding  of  the  business  idea  was  that  it 
was  to  be  a  longtime  European  headquartered  trading  business 
aimed  at  Iranian  trade. 

A     No,  I  don't  recall  any  conversation  like  that. 

Q     Dq  you  recall  any  conversation  about  that  idea, 
whatever  label  might  have  been  placed  on  it? 

A     I  recall  some  conversations  with  people  who  had 
retired  from  various  governmental  agencies  around  the  world 
to  create  some  sort  of  an  international  risk  analysis 
company,  and  s  don't  know  that  there  was  a  time  ascribed  to 

Q     With  whom  have  you  discussed  the  idea  of  an 
international  risk  analysis  company? 





A     It's  one  of  those  files  in  one  of  those  boxes  that 
I  gave  you.   A  fellow  by  the  name  of  Peleg  Radai.   I  don't 
even  know  what  the  thing  was.   The  name  of  this  one  company 
was  International  Protective  Security  and  Intelligence. 
Is  that  what  you  were  saying? 
Q     No,  that's  not  the  name. 

A     International  Protective  Security  was  the  name  of 
his  company. 

Q     The  document  you  just  referred  to  is  a  portion 
of  Exhibit  6  marked  as  H00231,  his  business  card. 

I  gather  Mr.  Radia,  referring  to  SH  229,  was  at 
least  for  reference  referred  to  Oliver  North  of  the  NSC  by 
yourself;  is  that  what  this  document  indicates? 

A     No.   What  I  recall  of  that  is,  he  told  me  he  already 
was  in  touch  with  Oliver  North,  and  I  said,  "Based  on 
what  you're  looking  for,  that's  your  best  bet  for  obtaining 

Q     Do  you  whether  he  did,  in  fact,  contact  Oliver 

A     I  have  no  way  of  knowing. 

Q     What  was  it  that  he  was  looking  for  from  Oliver 





A     I  think  that  he  was  looking  for  information  on 
something  to  do  with  a  lawsuit  in  a  magazine  in  Greece. 

Q     The  issue  is  whether  a  magazine  named  "Ethanos" 
was  KGB-aonnected? 

A     Right . 

Q     And  referring  to  SH230,  the  next  page,  Mr.  Radai 
told  you  that  Mr.  Livingston  and  also  Mr.  North  were  trying 
to  help  him  determine  whether  or  not  that  was  a  true 

A     Let  me  check  what  I  wrote  there.  ' 
(A  pause. ) 
Yes;  right.   That's  what  I  wrote. 

Q     Did  you  ever  discuss  the  concept  of  a  worldwide 
risk  analysis  organization  with  anybody  other  than  Mr.  Radai? 

A     There's  another  folder  in  there.   1  discussed  it 
one  time  with  a  Mr.  Navoth  —  N-a-v-o-t-h,  I  believe. 

Q     Where's  he  from? 

A     He's  from  Israel. 

Q  And  Radai  is  also  from  Israel? 

A     Yes . 

Q     What  is  the  time  period  of  these  discussions? 

A     I  don't  know,  really.   You  know,  we're  jumping 





around  a  lot  here,  and  you're  asking  me  some  questions  in 
1976,  and  then  we're  up  into  the  '80s  here,  and  I  can't  be 
more  specific.   It's  in  the  file. 

Q     Does  this  Radai  file  help  you  at  all? 

A     Yes.   I  need  the  other  one.   Okay.   The  first 
contact  with  Mr.  Radai  with  my  office  was  in  February  of 
'86.   I  did  not  talk  to  him  in  February  of  '86,  but  — 

Q     And  so  the  conversations  you're  talking  about  with 
Radai,  in  any  event,  were  in  '86? 

A      Right . 

Q     What  is  that  the  international  risk  analysis  firm 
would  engage  in,  exactly? 

A     Just  risk  analysis,  what  is  the  threat  and  the 

business  environment,  and  so  forth. 

Radai  was  peurticularly  interested  in  doing  work 

for  airlines,  helping  them  with  training  progreuns  to  deal 

with  international  terrorism.   Looking  back  on  this  Livingston, 

that  was  not  discussed  with  me,  as  I  look  at  this  memo. 

Livingston  was  discussed  with  an  associate  of  mine  ' 

in  my  office.   That  was  the  first  contact.  i 

Q     This  is  Neil  Livingston;  is  it? 

A     I  don't  know  who  it  is.   It  just  says  Mr.  Livingston 





was  a  political  analysis  firm. 

Q     Do  you  know  Neil  Livingston? 

A     No,  I  don't. 

Q     Do  you  know  Doug  Schlachter? 

A     Yes. 

Q     How  do  you  know  him? 

A     He  was  an  employee  of  Ed  Wilson  on  Wilson's  farm. 

Q     And  you  met  him  out  there  on  the  farm? 

A     Right. 

Q     How  often  did  you  go  to  Wilson's  faror? 

A     I'd  say  I'd  occasionally  go  down  there  for  a 
Sunday  picnic.   I'd  drive  down  with  my  family,  and  I'd  bring 
some  wine  and  he  provided  the  hamburgers.  We'd  have  a 

Q     Did  your  daughter  have  a  horse  that  was  there? 

A     Yes. 

Q     More  than  one? 

A     Ho,  just  one.   I  bought  a  pony  from  the  Wilson 

Q     And  this  is  the  same  pony. 

A     This  is  the  same  horse.   Eventually,  it  grew  up 
to  be  a  horse.   I  bought  it  as  a  foal. 





Q     Not  a  pony? 

A     No.   I  bought  it  as  a  small  horse.   Not  a  pony. 
The  term  may  not  be  correct.   I  bought  it  when  it  was  a 
small  — 

Q     Ponies  don't  grow  up  to  be  horses. 

A     All  right.   This  was,  I  guess,  some  sort  of  a 
offbreed  quarter  horse  or  something. 

Q     How  much  did  you  pay  for  it? 

A     I  don't  know.   Probably  some  munificient  sum  like 
$150  or  $200.   I'm  not  sure  what  the  exact  amount  was. 

Q     Moving  through  time  with  Schlachter,  what  dealings 
did  you  have  with  him? 

A     I  basically  didn't  have  any  dealings  with  him.   He 
was  around  on  some  occasions.   He  and  his  wife  would  join 
in  on  these  Sunday  picnics.   They  lived  on  the  property. 

Q     Did  you  ever  have  any  business  dealings  with  him 
at  all? 

A     No.   I  was  not  involved  with  him  in  any  business 
taHnaactions . 

Q     Never  received  money  from  him  or  gave  money  to 
him  under  any  circumstances? 

A     Never  gave  him  money,  never  received  any  money 




from  them. 

Q     Do  you  know  Bobby  Barnes? 

A     No. 

Q     Never  met  him? 

A     No,  I  never  met  him. 

Q     When  you  were  at  the  agency,  did  you  have  any 
direct  connection  with  Nicaragua? 

A     Well,  no.   I  mean,  I  don't  know.   You  have  to 
phrase  that  question  somehow  differently  because  that  doesn't 
generically  mean  anything  to  me.   In  other  words,  what  are 
you  trying  to  ask?  Because  did  I  have  any  contact  with 
Nicaragua,  what  does  that  mean?   I  mean,  I  read  traffic 
about  Nicaragua. 

Q     Let's  start  with,  were  you  ever  there? 

A     No,  I  don't  ever  recall  being  in  Nicaragua. 

Q     Did  you  have  any  meetings  with  Somoza? 

A     No.   Never  met  Somoza. 

Q     Did  you  discuss  with  Mr.  Clines  or  Mr.  Wilson  any 
mgilting  that  he  had  with  Somoza? 

A     No,  I  did  not.   I  have  no  recollection  of  that.    | 

But  that's  again  like  one  of  these  other  questions  that  you  j 

asked  me  during  the  course  of  this  investigation.   Other    | 





investigators  have  asked  me,  you  know,  so  I  know  or  at  least 
I  assume  there  has  to  have  been  some  contact  between  them. 

Q     But  like  any  other  instances,  you  didn't  know  about 
any  contact  that  they  had  with  Somoza  or  trips  to  Nicaragua? 

A     No,  I  was  not  aware  of  it. 

Q     Or  any  of  what  turned  out  to  be  allegations  before 
you  were  asked  about  it  in  an  investigative  context? 

A     Right.   I  was  not  aware  of  it. 

Q     Did  any  business  that  you  have  been  associated 
with  receive  money  through  a  corporation  in  Texas? 

A     Any  corporation  in  Texas? 

MR.  MC  KAY:   Can  you  give  us  the  name  of  it? 
THE  WITNESS:   If  I'm  not  mistaken,  API  Distributors 
was  originally  a  Texas  corporation  licensed  —  I  think  it 
was  licensed  to  do  business  in  Virginia. 

Q     And  did  it  remain  incorporated  in  Texas? 

A     I  don't  remember .   This  is  what  I  recall.   That 
may  have  been  a  Texas  corporation,  licensed  to  do  business 
in  —  I  can't  remember  if  it  was  Texas  or  Delaware.   That's  ' 
the  only  one  that  I  can  think  of. 

Q     Was  there  a  Delaware  corporation  that  was 





associated  with  you  in  some  way? 

A     Let's  see.   RAI  is  a  Delaware  corporation. 

Q     RAI  is  a  Delaware  corporation? 

A     Yes.   TGS  is  a  Delaware  corporation,  as  I  recall, 
doing  business  in  Virginia. 

Q     Did  Hakim  have  anything  to  do  with  EATSCO  that 
you're  aware  of? 

A     Was  he  ever  present  at  their  offices,  that  you're 
aware  of? 

A     No.   I  can't  say  that  I  ever  say  him  there.   My 
own  trips  out  there  were  very  rare,  and  therefore,  not 
necessarily  a  good  indicator.   I  never  recall  seeing  him 

Q     I  notice  in  your  financial  records  a  line  of 

A     Yes. 

Q     Do  you  know  what  a  back-to-back  loan  is? 

A     Yes,  generally. 

Q     Has  any  corporation  or  any  of  the  businesses 

we  listed  out  this  morning  ever  had  a  back-to-back  loan  that 

you're  aware  of?  I 


MR.  MC  KAY:   I  don't  understand  what  that  has  to   ■ 





do  with  his  line  of  credit.   Are  you  tying  the  two  together? 

MR.  HOLMES:   I'm  just  telling  him  why  I'm  asking 
him  the  question. 

MR.  MC  KAY:   So  that  was  some  preface  to 
back-tb-back  loans? 

THE  WITNESS:   No,  I  can't  recall  any.   The  line 
of  credit  I  have  is  from  a  bank  for  TGS  International,  and 
that's  simply  a  line  of  credit  obtained  from  the  bank  that's 
periodically  renewed. 

Q     Turning  then  to  that  specific  line  of  credit, 
that  line  of  credit  is  in  no  way  conditioned  on  or  related 
to  any  deposit  that  may  have  been  placed  in  another  financial 
institution  anywhere  in  the  world? 
A     No. 

Q     I  hesitate  to  ask  you  some  of  these  questions, 
because  I  probably  asked  you  before  when  you  were  not  under 
oath.   I  have  to  ask  again. 

You  are  aware  of  a  bank  called  Nugan-Hand  Bank? 
A     Yes,  aware  of  it.   I'm  aware  of  the  existence  of 
the  bank  called  Nugen-Hand.  ! 

Q  Ever  been  in  Australia? 




A     Yes,  I  have  been  in  Australia. 

Q     When? 

A     When  I  was  an  employee  of  the  U.S.  government. 

Q     What  time  frame? 

A     I  have  no  idea.   Probably  somewhere  in  the  period 
1973  to  1976.   Somewhere  in  there.   That's  the  best  I  can. 

MR.  MC  KAY:   I'm  going  to  object  to  the  whole 
line  of  questioning  about  the  Nugan-Hand  Bank.   I  can't 
conceive  of  the  Nugan-Hand  Bank  bearing  upon  the  committee's 
mandate.   Whatever  went  on,  Mr.  Sheehan  apparently  is  in 
the  Nugan-Hand  Bank.   For  whatever  reason,  I  don't  know. 
He's  made  a  great  flap  about  it.   I  can't  imagine  why  this 
committee's  interested  in  Nugan-Hand  Bank. 

MR.  HOLMES:   Well,  it's  connection  is  that  Mr.  Clines 
and  Mr.  Secord  are  connected  with  these  allegations,  and 
they  are  principals  in  our  investigation,  and  therefore, 
their  associations  previous  are  of  interest  to  us.   But  I'm 
sure  Mr.  Shackley  can,  in  some  way,  put  this  to  rest. 

MR.  MC  KAY:   Well,  let's  move  through  it  rather   i 
than  talking.   I  just  don't  see  what  in  the  world  it  has 
to  do  with  what  we're  spending  time  with. 





BY    MR.    HOLMES: 

Q     Have  you  ever  been  to  any  branch  of  the  Nugan-Hand 

A     No,  I  haven't  been  to  any  branch.   I  haven't 
been  to  the  bank. 

Q     Ever  have  a  deposit  there? 

A     No,  I  have  not. 

Q     Ever  had  any  control,  whatsoever,  over  any  funds 
that  were  on  deposit  withthe  Nugan-Hand  Bank? 

A     No,  I  have  not. 

Q     Do  you  know  anybody  who  has? 

A     I  think  I  told  you  once  before,  the  only  fellow 
that  I,  know  that  was  connected  with  the  Nugan-Hand  Bank  was 
an  employee  of  theirs.  Hand  himself,  and  a  fellow  by  the 
name  of  Houghton,  who  worked  for  them. 

Q     How  did    .  know  these  individuals? 

A     I  k'lew  Hand  from  Laos.   He  was  in  Laos  when  I 
waA  in  Laos. 

Q     And  Mr .  Houghton? 

A     Houghton  I  met  here  in  Washington  after  I  retired.; 

Q     And  you  say  he  was  an  employee  of  the  bank? 

A     That  was  my  understanding  that  he  worked  for  the  I 





bank,  primarily  specializing  in  the  Middle  East.   I  think  it 
was  Saudi  Arabia. 

Q  And  your  connection  with  Houghton  was  after  his 
connection  with  the  bank  was  over? 

A     After  his  connection  with  the  bank  was  over? 

Q     Was  he  still  working  for  the  bank  when  you  met 
him?   I  may  have  misinterpreted  the  way  you  phrased  that. 

A  All  I  remember  is  the  one  time  he  had  something 
to  do  with  the  bank,  and  he  was  responsible,  sort  of,  for 
Saudi  Arabia. 

Q     Have  you  ever  had  any  business  dealings  with  either 
Hand  or  Houghton  of  any  kind? 

A     Yes.   I  met  Hand  after  I  retired,  on  the  basis  of 
a  telephone  call  from  Bill  Colby,  who  said  Hand  was  in  the 
Washington  area,  had  asked  about  me,  would  I  have  any 
objections,  in  terms  of  meeting  Hand.   I  met  Hand  here  in 
Washington . 

Q  And  I  gather  from  your  answer  that  was  at  least 
in  contemplation  of  some  kind  of  business  relationship? 

A     No.  We  had  a  couple  of  meetings.   I  don't 
remember  whether  it  was  two  or  three,  over  the  period  that 
I  had  contact  with  him  after  I  had  retired.  He  put  me  in 





touch  with  a  friend  of  his  in  Taipei,  who  did  some  research 
for  me  on  trying  to  get  valves  and  flanges  manufactured  in 
Taiwan.   Nothing  ever  came  of  that,  because  of  the  way  the 
Taiwanese  people  wanted  to  structure  the  deal.   It  was  just 
not  a  doable  deal. 

Q     So  the  reason  --  the  reason  you  answered  yes  to 
the   question  of  business  dealings  with  him  was  that  there 
was  a  business  type  of  meeting? 

A     Yes . 

Q     No  actual  money  transferred? 

A     No  actual  money  transferred.   There  was  a 
discussion  of  whether  he  could  help  me  or  whether  I  could 
help  him.   The  only  thing  that  was  ever  followed  up,  had 
my  office  correspond  with  the  guy  in  Taiwan  about  valves 
and  flanges  and  nothing  ceune  of  that. 

Q     Other  than  those  meetings,  you  never  had  any 
business  meetings  with  either  Hand  or  Houghton? 

A     With  Houghton,  I  think  at  the  time  I  knew  him,  I 
may  have  seen  him  here  in  the  Washington  area  two  or  three 
times  also.   On  one  or  two  occasions,  I  had  a  long  distance 
phone  call  from  him,  where  he  was  chasing,  I  think  it  was 
aviation  gas,  J. P.  4.   And  I  never  did  put  any  kind  of 





deal  together. 

Q     Which  brings  us  rapidly  back  to  Ghorbanifar  in 
November  of  '84'  right?   You  met  with  Ghorbanifar  in 
November,  approximately  the  20th,  and  you  had  been  in  Europe 
a  total  of  about  three  days  during  that  trip;  is  that  right? 

A     The  best  I  can  remember  it  is,  that  it  was  the 
19th  through  the  21st.   That's  my  memor  of  the  thing,  the 
19th  through  21  November  of  1984. 

Q     I  want  to  know  the  names  of  every  single  person 
that  you  met  or  talked  to  during  those  three  days. 

A     Well,  let's  see.    I  left  here  with| 

Q     All  right.  ^^^^^^V-^ 

A     I  talked  with^^^^^^^l  Got  to  Hamburg  and  met 
The  next  morning,  as  I  recall,  I  met 
Ghorbanifar  and  talked  with^^^^^f  I'm  trying  to  walk 
through  this  chronologically.   Oh,  I  had  dinner  with  a 
German  friend  of  mine  that  evening. 

Q     Who  ia  that? 

A     His  name  i 

Q  His   first  neuae? 


Q     And  did  that  have  anything  to  do  with  business? 





A     No.   Let's  see.   I  had  dinner  with  him  and  his  wife, 
Q     Anybody  else? 

A     I'm  trying  to  think.   Well,  that  evening,  when  I 
to^^H^^no,  askec^^^^Hto  check  for 

me  on  the  possibility  of  who  from  the  Iranians  might  be  in 

Q     How  would  he  be  able  to  check  that? 

Q     A  government  type? 
A     Yes.  ^^^^H government . 
Q     Did  he  ever  tell  you  who? 

A     No.   He  wasn't  able  to  run  down  anybody  that  was 
any  kind  of  concern. 

Q     You  were  trying  to  ask  him  if  the  Iranian 
government  was  shadowing  you? 

A     No.   I  din't  know  when  we  arrived  who  we  were  going 
to  me,  so  I  asked  him  to  try  to  find  out  for  me  who  was 
going  to  be  in  the  area,  could  he  check,  was  there  any 
recaption  planned,  and  so  forth,  with  a  delegation,  to  find 
out  that  kind  of  data  for  me.   I  was  trying  to  figure  out 
who  these  people  were  going  to  be. 

Q     This  was  before  you  met  Ghorbanifar?  ■ 





A     Yes.   Or  maybe  it  was  —  yes,  I  met  him  the  next 
morning.   I  think  I  talked  witl^^^^^^Kn  the  phone  when 
we  first  got  there  on  the  19th. 

Q     And  then  he  reported  back  to  you  later  on  that  he 
was  unable  to  determine  anything? 

A     Yes.   Basically,  there  wasn't  anybody  of  any 
particular  interest  there. 

Q     And  when  did  he  report  that  back  to  you? 

A     Probably  either  the  late  evening  of  the  19th  or 
the  morning  of  the  20th. 

Q     So  he  got  right  on  the  phone  then? 

A     Yes.   I  talked  with  him  on  the  phone,  as  I  recall. 

Q     And  he  must  have  gotten  right  on  the  phone. 

A     I  don't  know  how  he  did  it. 

Q     Was  there  anybody  else  that  you  met  during  these 
three  days? 

A     No.   I  flew  from  there,  as  I  recall,  to  London 
and  then  from  London  back  to  the  states.   As  I  flew  Hamburg 
to  IdOndon  and  thea  London  to  the  states. 

Q     And  you  didn't  meet  anybody  in  London? 

A     I  don't  have  any  recollection  of  that.   I'd  have 
to  look  at  my  travel,  and  so  forth,  but  I  don't  have  any 





recollection  at  this  point  in  time.   I  think  I  came  straight 
back.   That's  what  I  recall. 

Q     All  right.   Do  you  know  a  Misha  Popov? 

A     No ,  I  do  not . 

Q     Do  you  know  a  Harry  Rastatter? 

A     Yes.   I  think  I  have  talked  to  a  fellow  —  wait 
a  minute.   Harry  Rastatter,  the  name  is  familiar.   It  has 
come  up  in  some  context.   If  you  refresh  my  memory  a  bit 
as  to  who  he  is. 

Q     He  was  an  associate  of  Hakim's  through  the  late 
'70s,  early  '80s  in  California  and  elsewhere. 

A     The  name  is  familiar  to  me.   I  can't  place  it  in 
any  context  at  this  point  in  time.   I  can't  sharpen  it  up 
any  more.   There  are  two  or  three  people  in  that  company 
that  we  dealt  with.   You  asked  me  the  other  day  about  one 
of  them,  who  was  the  guy  that  worked  on  some  radar  thing, 
and  I  remember  him  vaguely.   His  name  is  familiar,  and  I 
know  it  csune  up  in  other  questioning  of  me,  but  I  can't 
place  it  at  this  point  in  time. 

Q     I  don't  recall  whether  you  have  told  me  that      I 
you  did  or  didn't  see  any  part  of  the  hearings. 

Did  you  see  any  part  of  the  hearings  on  this? 





A  I  watched  some-. of  it,  but  sort  of  an  in  and  out 
kind  of  thing.  You  know,  stop  and  look  at  it.  it  was  on 
in  my  office. 

Q     If  I  refer  to  ARIA,  a  ship  that  was  purchased 
through  Denmark  by  North,  Secord,  Hakim,  et  al.,  would  you 
know  what  I'm  talking  about? 

A     Yes,  I  know  there  was  discussion  of  the  purchase 
of  a  ship. 

Q     Had  you  ever,  through  any  other  source,  heard - 
about  the  ship  prior  to  the  public  disclosure? 

A     I  have  no  recollection  of  anything  about  a  ship. 

Q  And  there  was  also  reference  in  the  hearings  to 
some  radios  that  were  supplied  tol 

A     I  have  no  recollection  of  that  ever  coming  up 
in  any  conversation  I  have  been  involved  in. 

Q     You  never  discussed  supplying  any  radios  to  any 
[nation  with  anybody  prior  to  the  hearings? 

A     No,  I  have  no  —  I  recall  no  radio. 

Q     Would  it  be  fair  to  say  that  after  the  Turner 
years, that  the  CIA  was  engaged  in  a  period  of  rebuilding 
and  revitalizing  its  covert  operation  capabilities? 

A     After  the  Turner  years? 




Q  Yes. 

A     I  have  no  way  of  knowing. 

Q     You  don't  mean  to  say  that  you  just  haven't  talked 

to  anybody  in  the  CIA  since  you  retired? 

A     No.   But  that's  not  the  kind  of  thing  you  would 

talk  to  him  about.   For  instance,  I  have  been  at  meetings 

where  people/were  still  in  the  CIA  were  present.   I  may  have 

said  hello  to  them,  John  or  Bill  or  whatever  it  is,  and 

may  have  discussed  the  topics  that  were  being  kicked  around 

at  the  symposium  or  whatever,  but  I  certainly  would  not  have 

talked  to  them  about  covert  action  capability  and  what  they 

were  doing. 

Q     Have  you  discussed  with  anybody  the  general 

proposition  of  a  need  for  a  covert  or  paramilitary  action? 

MR.  MC  KAY:   In  what  context?   Is  this  since  '79? 

MR,  HOLMES:   Since  '79. 

MR.  MC  KAY:   In  terms  of  CIA  activity? 

MR.  HOLMES:   No.   As  a  general  proposition,  in  or 
out  of  the  CIA. 

THE  WITNESS:   You're  going  to  have  to  be  more 
precise.   You  know  that  I've  written  a  book  on  guerrilla 
warfare.   You  know,  I've  lectured  at  universities,  and  so 




forth,  but  I  don't  —  I  taught  a  course  at  Georgetown,  so 
yes,  I  have  talked  about  the  reorganization  of  the 
intelligence  community,  but  that's  something  I  have  also 
written  about  in  my  book. 

I  have  written  articles  on  various  and  sundry 
things,  but  I  don't  discuss  those  with  the  people  in  CIA? 
I  lectured  at  the  Air  War  College. 

Q     So  am  I  understanding  correctly  that  you,  since 
'79,  have  taken  a  strictly  intellectual  role  in  that  process? 

A     That's  right. 

Q     In  other  words,  as  an  academic  advocate  perhaps, 
but  in  no  way  connected  with  any  operations? 

A     I  have  not  been  connected  with  any  CIA  operations 
since  I  retired. 

Q     Have  you  been  connected  with  any  operation  that 
could  be  classified  as  a  covert* or  paramilitary,  even  outside 
of  the  CIA? 

A     No,  I  have  not. 

Q     Do  you  know  a  Norm  Callahan? 

A     No.  That  name  doesn't  ring  any  bells  with  me.    1 


Q     Have  you  ever  met  a  Heine  Aderholt  —  j 





A-d-e-r-h-o-l-t?   Is  that  the  correct  spelling? 

A     This  Callahan?   What  is  his  first  name,  Norman? 

Q     Norm,  yes. 

A     No,  I  don't  recognize  Norman  Callahan. 

Q     Are  you  feimiliar  with  Mr.  Aderholt? 

A     I  met  Aderholt  at  some  point  in  Southeast  Asia 
between  1966  and  1972. 

Q     Have  you  had  any  association  with  him.  since  then? 

A     I  think  I  may  have  seen  him  once  since  I  retired, 
in  some  social  event  here  in  Washington.   That's  the  only 
thing  I  can  recall . 

Q     No  business  association? 

A     No. 

Q     Have  you  ever  discussed  with  him  covert  operations 
or  the  general  need  for  them? 

A     No.   I  don't  recall.   I  don't  recall  discussing 

it  with  him,  but  he  and  I  were  at  a  symposium,  I  think,  and 

if  you  call  that  a  discussion  with  the  people  talking  from 

the  floor,  I  don't  know.  ! 

Q     I  wouldn't  classify  it  as  that.  | 




A     But  he  and  I  were  at  the  National  War  College 
at  some  symposium. 

Q     Do  you  know  of  a  person  named  Svendsen  - 
A     No. 

A  former  Air  Force  officer? 
NO.   I  don't  have  any  memory  of  a  Svendsen. 
Do  you  know  of  a  company  named  All  Source? 
NO.  that  doesn't  tell  me  anything,   i-m  not 
familiar  with  that  company.  All  Source. 

MR.  MC  KAY:   I  don't  think  that's  even  on  the 

Off  the  record. 

(Discussion  off  the  record.) 


Q     Do  you  have  any  connection  whatsoever  with  any 
funds      were  derived  or  destined  for^^^^H^^H 
since  your  retirement  from  the  CIA? 





A  No. 

Q     Do  you  know  an  individual  named  Max  Hugel? 

A     No,  I  don't  personally  know  him. 

Q     Do  you  know  of  him? 

A     I  know  of  him  from  reading  about  him  in  the  papers . 

Q     And  that's  your  only  connection? 

A     That's  my  only  connection. 

Q     You  said,  the  last  time  we  were  together,  that 
you  knew  Richard  Allen? 

A     Yes. 

Q     Have  you  ever  discussed  — 

A     I  think  I  said  that,  but  I  do  know  Richard  Allen. 

Q     Have  you  ever  discussed  with  him  the  need  or  a 
need  for  a  covert  operations  capability? 

A     No.   And  certainly  not  in  any  one-on-one 
conversations.   He  may  have  been  in  some  symposium,  again, 
that  I  have  been  at. 

Q     Have  you  ever  been  to  Panama? 

A     When  I  was  in  government,  yes,  1  think  I  transited 
Panama  a  couple  of  times. 

Do  you  know  the  name  Steven  Samos,  as  a  person 





in  Panama? 

A     No.   That's  not  a  name  that  registers  with  me. 
Q     It's  S-a-m-o-s. 
A     No. 

Q     Are  you  familiar  with  the  name  Ramon  Milian 

A     No,  I'm  not,  but  I  think  I  read  something  about 
him  in  the  papers  recently. 

Q     Prior  to  your  reading  about  him  in  the  papers,  you 
had  not  heard  about  him? 

A     No,  that's  not  a  name  that  I'm  familiar  with. 

Q     Just  so  we're  on  the  same  wavelength,  what  was  it 
that  caught  your  attention  about  this  individual  in  the 

A     I  think  I  read  somewhere  that  he  is  in  jail,  that 

h«'a  a  drug  smuggler  or  something.   That's  what  I  remember 

reading  about  him. 

Q     I  think  we  must  be  talking  about  the  same 

individual.   This  one  was  a  money  launderer,  to  be  precise. 

for  drug  smugglers. 





A  It's  probably  the  same  individual.  That's  the 
extent  of  my  memory  from  what  I  read  is  different  from 
what  you're  telli: 





Q     Since  your  retirement  from  the  CIA,  have  you  . 
become  aware  of  any  government  entity  using  a  commercial 
laundering  service? 

A     No.   I'm  not  aware  of  any. 

Q     How  about  any  other  entity?  Have  you  any  knowledge 
of  any  such  service  even  existing?  Let's  start  with  that 

A     You  mean  money  being  transferred  or  converted 

Q     Right. 

A     No,  I'm  not,  other  than  straight  commercial 
bank  transactions.   No,  I'm  not. 

Q     Now,  this  Milian  Rodriguez  claims  to  have  made 
payments  to  the  Watergate  burglars  with  government  funds. 





Can  you  confirm  or  deny  that  that  occurred? 
A     I  have  no  way  of  knowing. 
Q     You  just  don't  know? 

A     I  just  don't  know.   I  have  no  way  of  knowing. 
Q     Now,  you  know  an  individual  named  Benson;  is 
that  correct? 

A     What's  the  name? 

Q     Benson. 

A     Which  Benson? 

Q     I  don't  know  which  Benson. 

Q     And  did  he  furnish  you  with  any  information  after 
you  left  the  CIA? 

A     No.   He  came  up,  I  think,  one  time  when  I  talked 
with  him,  when  I  was  checking  something  about  an  overt 





teference  to  the  Soviet  constitution,  when  I  was  writing  my 
book,  and  I  think  I  talked  to  him  about  my  book,  and  I  think 
in  some  library  or  one  of  the  libraries  who  looked  up 
something  for  me  on  the  Soviet  constitution.   An  exact 
quoting  out  of  the  Soviet  constitution. 

Q     That's  the  only  information  you  received  from 
him  since  you  retired? 

A     Right.   Well,  he  works  with  me  now 
If  we're  talking  about  the  same  person. 

Q     He  works  with  you  now? 

A     Yes.   A  fellow  by  the  name  of  Benson  Grayson. 
He's  an  economist  researcher,  and  he's  working  for  me,  if 
that's  who  we're  talking  about. 

Q     Your  papers  identify  Barbara  Rozzotti  as  a  primary 
counsel  to  your  firms. 

A     Yes. 

Q     This  is  the  saune  woman  who  was  also  Hakim's 

A     I  don't  have  any  knowledge  of  her  being  Hakim's 

Q     Is  she  also  Clines'  lawyer? 

A     Let's  eee.   Yes.   At  one  time,  she  did  represent 





Q     And  that  was  in  connection  with  the  recovery  of 
the  loan  from  Wilson? 

A     I  don't  know  the  totality  of  what  she  did  for 
him,  but  I  know  she  represented  hin. 

Q     Did  you  discuss  her  with  Clines? 

A     Discuss  what? 

Q     Did  you  discuss  the  underlying  acts  on  which 
Barbara  Rozzoti  was  representing  Clines,  with  Clines? 

A     No,  not  once  he  got  off  and  was  off  into  —  she  was 
the  lawyer  for  —  she  worked  on  helping  me  get  API  properly 
registered  and,  you  know,  that  kind  of  thing,  and  in  later 
years,  I  know  that  she  represented  Clines.   What  was  the 
nature  of  the  representation,  I  don't  know. 

Q     Did  you  ever  come  into  possession  of  furniture 
that  had  once  been  used  by  Mr.  Wilson? 

A     Not  that  I  know  of.   but  I  think  in  the  API  offices, 
th*re  was  some  furniture  there  that  Mr.  Clines  had,  and  I 
have  heard  stories  that  some  of  that,  at  one  time,  belonged 
to  Wilson.  I 

Q     From  whom  did  you  hear  the  story?  i 

A     I  don't  where  I  heard  those  stories,  but  that's   I 





what  I   heard. 

Q     Did  you  ever  ask  Mr.  Clines, "where  did  you  get 
the  furniture"? 

A     NO. 

Q     Did  those  stories  include  the  story  that  the 
furniture  had  once  belonged  to  Task  Force  157? 

A     No,  I  had  not  heard  that. 

Q     So  the  story  you  heara  was  that  it  was  Wilson's 
personal  furniture? 

A     Right.   It  had,  at  some  point  in  time,  been  in 
some  facility  that  Wilson  had  had,  and  Clines  had  the 
furniture.   That's  all  I  can  tell  you. 

Q     Have  you  or  has  any  business  you're  associated 
with  ever  received  funds  from  Mr.  Clines  at  the  EATSCO 

A     Any  funds  ever  received  from  EATSCO  were,  as  far 
as  I  know,  collected  for  the  papers  that  we  did  for  them. 
I  don't  know  how  I  got  those.   I  assume  those  came  in  the 
mail,  but  they  were  very  slow  paying.   Maybe  I  did  go  out 
to  their  office.   I  don't  really  know.   I  think  I  got  paid 
by  check  and  all  of  those  came  in  the  mail. 

Q     None  of  that  money  was  in  cash? 





A     No. 

Q     And  it  was  not  in  excess  of  the  total  of  $8000? 

A     That's  my  recollection  that  the  total  was  $8000. 

Q     Did  you  ever  know  Frank  Terpil? 

A     No. 

Q     Did  you  ever  discuss  with  Mr.  Clines  his 
relationship  with  Ghaddafi? 

A     His  relationship  with  Ghaddafi?  Clines' 
relationship  with  Ghaddafi? 

Q     Yes. 

A     No. 

Q     Did  you  ever  discuss  Wilson's  relationship  with 
Ghaddafi  with  emybody,  including  Clines,  prior  to  the 

A     No.   This  has  all  been  covered  ad  nauseeun  in  all 
these  investigations,  and  so  forth,  so  I  know  that  Wilson 
was  doing  work  for  Ghaddafi. 

MR.  MC  KAY:   He's  asking  you,  prior  to  the  time 
of  these  investigations. 


MR.  HOLMES:   I'm  aware  this  is  something  you  know 
ever  since  the  investigation. 






Q     Does  Clines  have  a  daughter? 

A     He's  got  a  couple  of  daughters. 

Q     Either  one  of  them  ever  work  for  Hakim? 

A     Not  that  I  know  of . 

Q     Do  you  know  a  Jerry  Daniels? 

A     I  know  a  Jerry  Daniels. 

Q     How  do  you  know  him? 

A     He  was  in  Laos. 

Q     When  you  were  there? 

A     Yes. 

Q     What  has  your  relationship  been  with  him  since 

A     He ' s  dead . 

Q     When  did  he  die? 

A     I  don't  remember  when  he  died.   He  died  after  I 
retired,  but  that's  as  close  as  I  can  fix  it  for  you. 

Q     Between  Laos  and  the  time  that  he  died,  did  you 
have  any  contacts  with  him? 

A     I  don't  ever  recall  seeing  him  after  I  left 
the  government. 

(Recess. ) 





BY   MR.    HOLMES: 

Q  We  were  talking  about  Jerry  Daniels,  and  I  just 
asked  you  if,  between  Laos  and  the  tine  of  his  death,  you 
had  any  contact  with  him, 

A     I  don't  recall  between  my  retirement  and  his  death. 

Q     Is  there  a  Four  Seasons  restaurant  in  the 
Washington,  D.C.  area? 

A     Yes . 

Q     Have  you  ever  been  there? 

A     Yes. 

Q     Ever  been  there  with  Secord? 

A     I  have  no  memory  of  going  there  with  Secord . 

Q     Have  you  ever  been  there  with  Hakim? 

A     Yes,  I  think  I  have. 

Q     And  how  and  when  did  that  occur? 

A     A  niimber  of  years  ago.   I  can't  remember  when 
Hakim  stayed  there,  and  I  think  I  met  him,  and  either  had 
breakfast  or  lunch  with  him  at  the  hotel. 

Q     Approximately  when  was  this? 

A     I  have  no  idea. 

Q     Was  this  after  your  ' 76  meetings  with  him? 

A     No.   This  was  after  I  retired,  but  I  don't  know 





when  that  was. 

Q     Could  Secord  have  been  there  with  you  and  Hakim 
on  that  occasion? 

A     I  have  no  memory  of  Secord  being  there. 

Q     Have  you  ever  heard  of  an  air  freight  company 
named  Trans  World? 

A     No,  I  haven't.   I  think  it's  one  of  those  listed 
in  your  subpoena  document. 
That's  my  only  — 

Q     Do  ydu  know  an  Ed  Dearborn? 

A     Ed  Dearborn? 

There  used  to  be  —  I  don't  know  whether  this  is 
the  same  fellow. 

Q     The  same  individual. 

A     All  right.   So  I  know  hin 

I  don't  ever  recall  seeing  him  since  I 

retired . 

Q     Do  you  know  a  Gene  Vlheaton  or  Carl  Jenkins? 

A     Carl  Jenkins,  I  know.   And  what  is  the  other 

guy's  name? 

Q     Gene  Wheaton  —  W-h-e-a-t-o-n. 





ranember  his  first  name.   I'm  not  sure  it's  the  same  guy, 

Q     Let's  assume  it's  not. 

A     Okay.   That's  the  only  Wheaton  that  I  can  remember. 

Q     And  Carl  Jenkins? 

A     Carl  Jenkins, 

Q     Have  you  had  any  contact  with  him  since  then? 

A     I  haven't  seen  him  in  a  number  of  years.   He- 
occupied  some  office  space  in  Clines'  companies  at  the  time 
that  I  moved  out  of  there.   He  was  beginning  to  occupy  some 
space . 

Q     And  the  nature  of  his  business  at  that  point  in 






I  have  no  idea. 

You  have  never  done  any  business  with  him  since 


No  business-related  discussions? 

I  didn't  do  any  business  with  him  then.   You 
say  I  haven't  done  any  business  with  him  since.   I  mean,  I 
haven't  done  any   business  with  himj_.^Hl8t  know  he  was 

business  with  tiim.  ^ius 





scheduled  to  move  in,  as  I  moved  out. 

Q     I  understand.   All  right. 

Have  you  heard  of  the  Southern  Air  Transport 
since  your  retirement,  other  than  these  investigations? 

A     No,  not  other  than  these  investigations. 

Q     The  name  Southern  Air  Transport  was  new  to  you 
when  it  hit  the  newspapers  as  connected  with  the  Hasenfus 

A     You're  going  to  have  to  clarify  that.   Southern 
Air  Transport,  you  know,  you  asked  me  some  question  about 
it,  and  I  told  you  you  ought  to  go  talk  to  the  Agency  about 
Southern  Air  Transport. 

Q     All  right.   I'm  going  to  carve  out  a  piece  of 

A     So  you're  going  to  have  to  be  more  specific. 
Otherwise,  I  can't  help  yovi. 

Q     You  retired  in  '79? 

A     Right . 

Q     From  the  date  of  your  retirement  —  that's  the 
beginning  date  —  Hasenfus  was  shot  down  October  5,  '86. 
That  will  be  the  ending  date.   Did  you  hear  about  Southern 
Air  Transport  between  the  beginning  and  ending  date? 





A     No.   I  don't  recall  Southern  Air  Transport  ever 
coming  up. 

Q     Do  you  know  an  individual  neuned  Bob  Lilac? 

A     Yes.   I  know  Bob  Lilac. 

Q     How  do  you  know  him? 

A     He  was  an  Air  Force  officer  working  in  the 
Pentagon,  and  as  I  recall,  I  met  him  here  in  Washington 
after  ■!  retired. 

Q     And  in  what  context? 

A     I  think  I  met  him  when  I  was  helping  Bander  Bin 
Sultan,  when  he  was  working  on  his  master's  program. 

Q     And  you  were  helping  Prince  Bander  in  what 

A     He  was  getting  a  master's  degree  from  Johns 
Hopkins  _Jfrie«^niversity  here  in  Washington. 

Q     What  help  were  you  to  him  in  that  program? 

A     I  was  peurt  of  the  lecturing  staff  for  his  master's 

Q     Would  you  explain  to  me  what  that  is? 

A     Well,  a  program  was  laid  out  for  him  by  a  group 
of  people,  so  he  could  qualify  for  a  master's  program. 
I  was  one  of  the  instructor  —  lecturers  in  that  particcular 






Q     And  they  called  it  a  lecturer,  even  though  it's 
more  like  a  tutor? 

A     Yes.   That's  my  recollection  of  what  they  called 
it,  was  a  lecturer. 

Q     The  function  that  you  performed  was  one-on-one 
tutoring  with  the  Prince? 

A     Yes,  basically,  one-on-one.   Sometimes  there  would 
be  one  or  two  other  people  there. 

Q     And  this  was  what  period  of  time? 

A     I  retired  in  '79.   I  don't  know.   It  could  have 
been  '79- '80,  somewhere  in  that  period. 

Q     And  the  subject  of  your  lecturing? 

A     Was  such  things  as  national  policy  formulation? 

Q     And  that  was  arranged  through  Mr .  Lilac? 

A     No.   That's  how  I  met  him.   Lilac  was  in  and 

out  of  Bander's  quarters  at  that  time,  and  if  I'm  not 

mistaken.  Lilac  was  the  Saudi  Desk  Officer  at  the  Pentagon 

at  the  time . 


Q     Was  he  also  a  personal  friend  of  the  Prince? 

A     I  couldn't  characterize  that.   He  was  in  and  out 

there  all  the  time.   That's  all  I  can  tell  you.   What  their  ; 





relationship,  I  don't  know. 

Q     We  touched  on  a  project  with  Mr.  Neidhart  — 
N-e-i-d-h-a-r-t  —  at  Hakim's  company,  Stanford  Technology. 

A     Yes. 

Q     The  nature  of  the  particular  project  was  helicopter 
transportable  radar;  is  that  correct? 

A     No .   You  were  trying  to  — 

Q     I  asked  you  once  before. 

A     You  tried  to  get  me  into  this  helicopter  radar 
business,  and  I  was  telling  you  that,  no,  ray  recollection 
was  radar  for  Trinidad  and  Tobago,  and  it  was  coastal 
surveillance  type  of  radar. 

Q     Would  it  be  suitable  for  installation  in  a  van, 
for  example? 

In  other  words,  was  it  mobile? 

A     I  don't  remember.   All  I  know  is  it  was  coastal 
surveillance  radar. 

Q     Oo  you  know  whether  any  such  system  or  similar 
system  had  ever  been  developed  by  the  CIA  or  any  contractor 
for  CIA? 

MR.  MC  KAY:   What  system?  j 

MR.  HOLMES:   The  system  he  was  discussing  with    i 






Mr.  — 

THE  WITNESS:   No,  I'm  not  aware  of  any. 
Q     You're  not  aware  whether  there  was  or  wasn't? 
A     Yes.   I  mean,  that's  normally  not  the  kind  of 
thing  that  would  have  been  developed  by  CIA. 

Q     Have  you  had  any  dealings  with  Jamaica  since  you 

A     No.   Dealings?  No.   I  had  some  inquiries  that  I 
made  of  these  things,  but  I  haven't  had  any  dealings  with 

Q     What  were  the  inquiries  about? 
A     I  was  trying  to  find  whether  the  Nigerian  oil 
minister  was  visiting  Jamaica,  and  he  was  supposed  to  be 
in  Jamaica. 

Q     You  never  had  any  business  dealings? 
A     No ,  nothing . 

MR.  MC  KAY:   Off  the  record. 
(Discussion  off  the  record.) 
Q     Since  you  retired,  have  you  met  former  National 
Security  Adviser  Robert  McFarlane? 





A     No. 

Q     Have  you  met  Elliott  Abrams? 
A     No. 

Q     Do  you  know  whether  they  are  members  of  an 
organization  known  as  The  Circle?  Just  yes  or  no. 

A     I  don't  know  that  they  are  members  of  that 

Q     Have  you  ever  heard  of  an  individual  named 
Richard  Brenneke  —  B-r-e-n-n-e-k-e? 

A     No,  that's  not  a  name  I'm  familiar  with. 
Q     He's  an  Oregon  businessman. 
A     No,  that  doesn't  ring  any  bells. 
Q     I'd  like  you  to  tell  me  what  your  history  of 
association  has  been  with  Oliver  North. 
A     Very  simple. 

Q     It  may  be  a  very  short  story. 

A     It  is  very  short.   I  ran  into  him  once,  as  I  told 
you,  in  the  office  of  a  Washington  attorney. 

Q     Now,  that's  for  personal  meetings;  right? 
A     Right.  I 

Q     That '  8  your  history  with  North  on  personal  meetings^ 
A     Yes. 





Q     Have  you  ever  referred  anybody  to  Oliver  North  for 
any  operational  purposes? 

A     No,  not  that  I  can  recall.   You  know  that  one  file 
that  we're  looking  at,  somebody  said  they  were  already  in 
touch  with  North,  and  I  said  that's  probably  a  good  guy  to  be 
in  touch  with. 

Q     And  you  have  never  spoken  with  him  on  a  personal 
meeting,  other  than  that  one  time? 
A     That's  right. 

Q     And  I  ask  you  the  same  questions  ror  Mr .  Poindexter 
A     I  did  meet  Poindexter  once  sometime  in  the  fall 
of  1985. 

Q     What  were  the  circumstances  of  that  meeting? 
THE  WITNESS :   Can  we  step  out  for  a  minute? 
MR.  HOLMES:   Sure. 
(Recess. ) 

MR.  HOLMES:   Back  on  the  record. 
THE  WITNESS:   Would  you  mind  repeating  the 

Q     I  asked  you  the  circumstances  of  your  meeting  with 





Vice  Admiral  Poindexter. 

A     I  took  an  Italian  citizen  over  to  the  White  House 
to  meet  him.   After  the  introductions  were  made,  I  left. 

Q     This  was  in  the  fall  of  '85? 

A     Yes. 

Q     You  have  never  spoken  to  him  before  or  after? 

A     No,  I  have  not  spoken  to  him  before  or  after  that. 

Q     And  how  was  it  that  you  took  this  particular 
citizen  to  see  him? 

A     This  fellow  was  looking  to  talk  with  either 
Poindexter  or  McFarlane,  and  I  arranged  for  him  to  meet 

Q     For  what  purpose? 

A     To  discuss  a  Vaticem  issue. 

Q     I  gather ,  from  the  f ac  t  that  you  referred  to  your 
lawyer,  that  this  has  some  national  sensitivity? 

A     Yes.   It's  a  sensitive  thing,  and  it  is  Vatican 
business  and  doesn't  have  anything  to  do  with  this. 

MR.  HOLMES:   I'm  going  to  go  through  these  files 
that  you  provided  us  and  simply  stop  at  points  where 
questions  come  up.  '■ 

As  we  go  through,  I'll  identify  the  page  number 

cf-nsoM.  imcrnj.  inc 





that  we're  referring  to,  and  in  each  case,  the  number  will 
begin  with  an  "S-H."   I'll  just  say  the  numerical  designation 
that  follows. 


Q     I'm  looking  at  page  163,  the  Michael  Ledeen  file. 
I  gather  from  this  and  other  documents  in  this  file,. that 
you  have  been  discussing  deals  relating  to  oil  with 
Mr.  Ledeen  for  a  number  of  years;  is  that  accurate? 

A     Yes.   Either  I  or  somebody  in  my  office,  primarily 
Mr.  Jameson,  one  or  the  other  of  us. 

Q     And  would  it  be  fair  that  you  and  Ledeen  were 
partners  in  various  ventures,  hoping  to  obtain  oil  fields? 

A     No.   That;s  not  — 

Q     Why  is  Mr .  Ledeen  receiving  copies  of  these 
various  proposals  then? 

A     Can  I  see  that  one?   I  think,  as  I  told  you  the 
other  day  —  okay,  this  looks  like,  if  a  deal  had  come  out 
of  this,  there  would  have  been  a  fee  for  the  participants. 
But  it's  not  a  structured  kind  of  thing,  where  you  would 
call  it  a  partnership.   In  other  words,  somebody  helped  you 
put  together  a  particular  oil  transaction,  you  end  up  with  i 
the  equivalent  of  a  finder's  fee.   Had  one  of  those  gone    i 






through,  that's  what  would  have  occurred,  but  the  reason 
I  wanted  to  look  at  this  is  because  Mr.  Jameson  and  Mr.  Ledeen 
did  do  some  business  separate  from  me.   I  wasn't  interested 
in  pursuing  it.   I  think  I  told  you  that  I  didn't  think  it 
had  any  chance  of  success,  and  I  wasn't  interested  in 
pursuing  it.   They  decided  to  pursue  it.   They  did  and  nothing 
ever  came  of  it. 

Q     Although  the  word  "partnership"  sounds  a  little 
strong  to  you,  maybe  "joint  ventures"  and  certain  discussions, 
how  would  you  characterize  that  sort  of  networking  daisy 

A     I  would  just  say  it ' s  a  finder's  fee  type  of 
arrangement.   Somebody  helps  you  put  a  deal  together,  and 
depending  on  what  your  exact  role  is,  if  the  deal  goes 
through,  they  would  get  a  percentage  of  that  particular 

Q     Did  you  discuss  in  the  early  stages  of  a  particular 
deal  what  percentage  the  finder's  fee  might  be? 

A     No. 

Q     Was  it  understood  to  be  a  flat  rate  then?        ' 

A     No.   It  was  understood  that  if  we  got  beyond      I 
the  point  of  these  basic  inquiries,  my  experience  has  been   | 





that  there  are  so  many  of  these,  and  99  percent  of  them 
don't  go  anywhere,  that  it's  ridiculous  to  structure  anything. 

In  other  words,  if  you  simply  send  off  a 
telex  to  make   an  inquiry  and  nothing  happens,  you  don't  do 
anything.   And  that  is  what  happened  to  most  of  those. 

As  a  matter  of  fact,  that's  what  happened  to  all 
of  them. 

Q     You're  sort  of  relying  on  each  other's  good  faith, 
that  if  you  strike  oil,  so  to  speak,  you  will  be  fair  to 
each  other  in  parceling  out  your  commission? 

A     Right . 

Q     I  notice  that  a  number  of  these  deals  involve 
Portugal  in  one  way  or  another,  and  I  use  that  observation 
to  ask  you  whether  you  ever  discussed  Portuguese  officials 
or  made  introductions  or  referrals  between  Portuguese 
officials  and  Tom  Clines . 

A     No. 

Q     Looking  now  at  number  166  —  page  166 ,  in  the 
SUM  file  ~  this  particular  one  happens  to  be  dated  21 
November  1984,  the  day  on  which  we  know  you  were  in  Europe,   | 
and  this  is  from  Jameson  to  somebody  in  Portugal  on  behalf  of 
yourself  and  Mr.  Ledeen;  is  that  correct? 




A     Let  me  take  a  look. 
(A  pause.) 

Yes,  that's  what  it  says.   It's  to  a  company  to 
look  at  an  oil  transaction.   It  would  be  a  trade  of  commodities 
for  oil. 

Q     This  particular  oil  is  Iranian  oil? 

A     Yes. 

Q     And  you're  talking  to  2  million  barrels  at 
$22  a  barrel? 

A     Yes. 

Q     Does  the  fact  that  Ledeen's  name  appears  on  this 
document  indicate  that  he  is  dealing  with  you  on  the  deal  as 
a  co-ccxnmission? 

A     I  would  say  that,  based  on  that,  that  he  and 
Jameson  had  a  conversation  —  let  me  see  if  there's  anything 
else  in  there  —  that  they  had  a  conversation,  and  on  the 
basis  of  that,  one  or  the  other  decided  to  —  this  makes 
reference  to  another  message. 

Without  going  back  into  this  thing,  it  makes 
reference  to  Mr.  Miranda.   Mr.  Miranda  was  the  head  of  the   j 
Portuguese  Oil  Company,  and  I  don't  know  what  prompted  this 
particular  one,  but  obviously,  Miranda  was  asking  that      [ 

CC-ftOOM  KKCTtn.   INC 




Jameson  go  back  to  this  particular  guy  and  spell  out  the 

Q     All  right.   Now  I  gather  that  Jameson  is  answering 
for  you  and  Ledeen,  since  you're  not  there. 

A     Yes.   He's  amswering  in  a  generic  sense,  yes. 

Q     Was  Ledeen  also  there? 

A     That  I  don't  know. 

Q     And  on  page  173,  we  have  a  very  similar  document, 
this  one  referring  to  Saudi  light  up  to  50,000  barrels  per 
day  at  $27.85  a  barrel. 

Is  this  another  feeler  type? 

A     Yes.   Let  me  just  see  it.   Yes,  that's  another  one. 
I  would  say,  on  the  basis  of  that,  that's  something  that 
Ledeen  came  up  with.   Sent  it  to  Miranda,  the  fellow  at  the 
Portuguese  Oil  Company. 

Q     So  would  it  be  accurate,  in  the  vernacular,  to  say 
that  Ledeen  is  sort  of  bird-dogging  the  deals  for  you? 

A     No,  he  wasn't  bird-dogging  for  me.   If  he  found  a 

deal  and   he  thought  I  could  help  out,  or  I  was  the  best  one 

with  facility  for  helping  out,  he  would  come  to  me.  That 

doesn't  mean  he  wasn't  dealing  with  two  or  three  other 

people  at  the  same  time.  ! 





Q     Page  176.   Another  Iranian  crude  deal.   This  one 

is  300,000  barrels  per  day  for  a  year.   That's  a  sizable 

chunk  of  change,  isn't  it? 

A     It  would  be,  if  it  went  through. 

Q     My  little  math  that  I  did  when  I  read  that  indicates 

we're  talking  about  $2,682,750,000. 

A     Yes.   But  very  few  of  those  go  through.   Yes,  that 

looks  like  another  one  of  these  deals  that  he  has  picked  up 

and  had  come  in  and  again  went  to  Miranda.   Probably  one  of 

the  reasons  for  that  is,  he  introduced  me  to  this  fellow 

Miranda,  so  he  thought  that  was  something  that  Portugal  would 

like  in  the  oil  deal  and  probably  came  to  me. 

Q     What  type  of  percentage  are  you  talking  about  as 

a  finder's  fee  on  a  deal  like  that? 

MR.  MC  KAY:   None  of  them  ever  came  to  fruition. 

MR.  HOLMES:   I  know. 


Q     What  is  the  industry  standard? 

A     There  is  no  industry  standard.   In  other  words, 

at  that  time,  when  it  was  $20-scaie-odd  a  barrel,  probably   } 

would  have  been  lucky,  if  you  could  have  gotten,  say,  2  or   i 

3   cents.  ■ 

l-nBOM.  iCHMTCn.  INC. 





Q     On  the  dollar? 
A     No,  on  the  barrel. 

Q     On  page  179,  there's  a  reference  to  an  ISI,  and 
in  parentheses,  "President  Michael  Ledeen  has  located  a  gas 
supply . " 

What  is  "ISI"? 
A     I  have  no  idea. 

Okay.   That  was  essentially  a  deal  that  Jameson 
and  Ledeen  worked  on,  which  basically,  after  I  got  into  it, 
T.  didn't  think  there  was  anything  in  it  and  walked  away  from 
it.  They  pursued  it  for  a  while  and  got  a  lot  of  heartburn 
from  it. 

Q     This  is  the  deal  you  were  talking  eUsout  the  other 
day  that  Jameson  and  Ledeen  did  separately? 
A     Right. 

MR.  MC  KAY:   Let  me  state  this  on  the  record. 
We're  never  going  to  get  through  here.  His 
question  is,  what  is  ISI.   You  don't  know  what  ISI  is,  wait 
for  the  next  question,  because  he  may  not  have  any  interest 
in  it. 

Q     Did  you  ever  discuss  Portuguese  government  ties 

i-nstML  MNtrtn.  inc. 




with  Secord,  as  apart  from  Clines? 

A     No,  not  that  I  can  recall. 

Q     I'm  going  to  show  you  page  180,  dated  1  March  of 
'84,  and  I  want  to  ask  if  you  recall  this  deal.   This  is 
another  fairly  sizable  deal,  if  it  wwent  through,  of  course. 

A     No,  I  don't  recall  this  specific  deal.   That  was 
your  question;  right?   Do  I  recall  the  specific  deal? 

Q     Right. 

A     No,  I  don't  recall  the  specific  deal. 

Q     This  one  is  from  Michael  Ledeen.   Do  you  know 
whether  you  had  anything  to  do  with  this  deal? 

A     No.   It  looks  — 

Q     I  assume,  since  he's  signing  off  as  TGS 
International,  he  was  doing  it  at  your  office;  right? 

A     Well,  that  looks  to  me  like  we  transmitted  this 
for  him.   He  needed  to  send  a  telex,  and  we  sent  a  telex 
for  him  as  an  accommodation. 

Q     Do  you  know  whether  anybody  in  your  office  had 
any  part  of  this  deal? 

A     I  don't  recall  that  particular  transaction,  and  I  | 

would  say,  given  the  way  that  message  is  set  up  and  one     i 

thing  or  another,  I  would  assume  we  did  not,  that  we  were    ' 

CE-noou  wmrrus.  inc 



msismm    i/".'/ 

simply  acconmbdating  Ledeen  by  transmitting  a  telex  for  him. 

Q     Do  you  know  whether  anybody  in  your  office  had 
any  conversations  at  all  with  any  Japanese  during  this 
period  of  time,  early  in  1984? 

A     No,  I  don't  recall  our  being  in  touch  with  any 

Q     With  whom  in  Portugal  is  this  deal  being  done? 
I  see  that  it's  — 

MR.  MC  KAY;   I'm  going  to  object.   The  document 
speaks  for  itself.   The  witness  says  he  doesn't  know  anything 
about  the  deal.   It's  a  matter  of  interpreting  what  is 
written  down. 

MR.  HOLMES:   I  don't  know  how  to  interpret  this, 
so  I'm  asking  him. 

THE  WITNESS:   That  address  is  not  the  address  of 
the  Portuguese  Oil  Company. 

Q     You  have  had  a  chance  to  read  this  document.   Can 
you  tell  m«  what  business  purpose  would  be  served  by  this 
arrangement  they  are  discussing? 

A     Let  me  read  it  again.   I  was  looking  at  it  from 
a  different  point  of  view. 







(A  pause.) 

I  don't  know.   I  can't  help  you  on  the  basis  of 

Q     Why  wouldn't  Nigeria  simply  sell  their  oil 
outright  to  the  Japanese  under  the  circumstances  described 

A  It  depends  what  the  quotas  were  at  that  time.  I 
mean,  what  year  is  that?  That's  '84.  You'd  have  to  do  an 
awful  lot  of  research  to  try  to  get  an  answer  to  that. 

You'd  have  to  go  back  and  see  what  the  Nigerian 
OPEC  production  quota  was,  whether  they  were  in  excess  of 
their  quota  at  that  particular  time,  whether  this  was  a 
way  they  were  trying  to  circumvent  the  quota.   A  lot  of 
cheating  on  quotas. 

Q     So  you're  speculating  that  perhaps  the  business 
purpose, widely  defined,  being  served  here,  is  the  business 
of  selling  on  the  free  market  instead  of  obeying  the  OPEC 

A     It's  conceivable  that  they  could  be  selling  on 
the  world  market  in  excess  of  quota,  and  this  is  a  mechanism 
to  permit  them  to  do  that. 

Q     And  they're  willing  to  let  go  of  the  ten  percent,  i 





in  order  to  accomplish  that  purpose? 

A     It's  quite  common. 

Q     10  percent  in  this  case,  being  $98,550,000. 

A     Quite  common  to  discount. 

Q     Do  you  know  whether  ISI  had  anything  to  do  with 
the  deal  described  in  page  180? 

A     No. 

Q     I'm  showing  you  page  111  from  the  Albert  HaJcim 
file.   I  just  want  to  flip  past  these.   I  gather  from  the 
fact  that  for  a  number  of  months  in  a  row,  the  figure  being 
billed  comes  up  to  $5065,  totaling  up  the  consultant's 
salary,  secretary,  office  rent,  parking  refund  for  the 
month,  that  was  a  fairly  flat  rate  between  yourself,  for 
yourself  as  RAI  and  Albert  Hakim,  as  Triangle  Associates, 
during  that  period  of  time  in  '82? 

A     Yes,  because  one  of  those  consultant  salaries,  I 
told  you,  I  administered^^^^^^^^^H  There  was  a  secretary 
that  he  used,  office  rent,  parking,  the  retainer  for 
December.   That  was  what  he  was  paying,  essentially,  RAI, 
for  papers  that  were  being  prepared  for  him. 

Q     So  the  consultant  being  referred  to  here  is 

ct^noMt  ivoiiiu,  inc. 




A     Right . 

Q     And  the  retainer  is  something  RAI  is  getting,  in 

A     Right. 

Q     And  that  apparently  continues  through  July  '82, 
anyway,  the  same  general  setup? 

A     Yes,  the  same  basic  formula. 

Q  Now,  this  one  is  dated  March  of  '82.  When  did 
this  arrangement  begin,  when  did  the^^^^^Hconsultancy 
with  Hakim  begin? 

A     I  don't  know.   Maybe  I  can  tell  from  looking  at 
the  file. 

Q     That's  probably  the  earliest  one  in  there. 

A     Let's  see  if  I  can  tell  from  that. 

Q     You're  looking  at  page  126? 

A     Yes.   Let's  see.   It's  the  billing  for  January, 
consulting  fee,  February.   I  would  say  it  must  have  started 
about  then. 

Q  I'm  assuming  that  since  the  subpoena  goes  back 
to  January  of  '82,  that's  why  it  ends  there. 


I-nSOM.  MMMmilS,  INC 





Q     So  I  want  to  know  if  it  was  in  existence  before 

A     I  really  couldn't  tell  without  going  back.   I 
don't  have  all  these  numbers  in  my  head.   I  couldn't  tell. 

Q     In  page  15  is  an  example  cover  letter  of  an  Albert 
Hakim  financed  RAI/Iran/Iraq  War  information:  is  that  right? 

A     Let  me  take  a  look  at  it. 
(A  pause.) 

Q     And  what  follows  is  the  intelligence  itself? 

A     Yes. 

Q     On  page  24,  there's  a  reference  to  Bell  helicopters 
from  American  Bell  to  its  Italian  branch. 

Are  these  the  S2une  helicopters  that  we  talked 
about  before? 

A     Let  me  see. 

Q     These  are  destined  for  Iran,  apparently. 

A     No,  I  think  that's  a  different  thing.   That  was 
a  carryover  going  back  from  what  I  remember,  going  back  to 
the  days  of  the  Shah.   That's  some  equifsnent  that  was  sold 
to  the  Shah  but  had  not  been  delivered. 

Q     So  it  was  already  purchased,  and  there  was  no 

,  MNams.  INC. 





further  need  for  the  helicopters,  was  there? 

A     I  think  what  happened  is  that  Iran  bought  a  lot 
of  the  equipment,  but  when  the  Shah  fell,  the  equipment  was 
in  the  pipeline  and  that  equipment  wasn't  delivered,  and  a 
lot  of  those  have  subsequently  been  arbitrated. 

Q     Do  those  helicopters  or  the  promise  to  deliver 
those  helicopters  have  anything  at  all  in  common  with  the 
helicopters  that  we  were  talking  about  relating  to  Central 

A     No.   And  they  have  nothing  to  do  with  the 
helicopters  we  were  talking  about  for  Korea. 
THE  WITNESS:   Can  we  take  a  break? 
MR.  HOLMES:   Sure. 
(Recess. ) 
Q     Mr.  Shackley,  looking  at  page  66  of  the  materials 
you  provided,  there  is  a  reference  to  a  joint  venture  to 
sell  Stanley  Vidmar  products  in  Egypt.   This  is  a  memo  by 
yourself  about  a  meeting  with  Mr.  Hakim  in  New  York. 
A     Right. 

0     My  question  is,  whatever  became  of  the  joint 
venture  you  were  discussing  with  Hakim  in  New  York? 






A     Nothing.  We  gave  him  some  material  on  the 
Stanley  Vidmar  data.   He  cast  it  in  front  of  whoever  were 
his  Egyptian  contacts.   No  response. 

Q     This  related  to  the  modularized  storage? 

A     Right. 

Q     And  on  page  75  —  this  is  a  telex  to  Hakim  — 
no,  it's  from  Hakim  to  you,  referring  to  a  meeting  a  week 
before.  That  would  have  been  in  October  of  '82  in  Geneva, 
about  crude  oil  and  the  Iranian  government.   Could  you  tell 
me  more  eibout  this  deal,  after  looking  at  the  document? 

A     It  looks  like  he  was  proposing  —  where  is  the 

Q     I'm  not  sure  we  have  the  answer. 

A     That  doesn't  bring  back  any  memories  of  anything. 
Certainly,  no  deal  was  concluded  as  a  result  of  that.   I 
don't  know  what  the  specifics  of  that  are. 

Q     There  is  another  reference  on  page  79  to  either 
another  Iramian  crude  oil  deal  or  perhaps  the  same  deal  in 
a  different  reincarnation,  and  another  one  on  page  85, 
an  Iranian  crude  oil  deal  with  several  potential  buyers  on 
2  September. 

Would  it  be  accurate  to  say  that  simply  you  and 
Hakim  were  inla  similar  relationship  as  yourself  and  Ledeen, 

ei-rtaati.  KMarun.  inc. 



et-nocML  MMWTtin.  inc. 



in  that  you  were  both  seeking  to  broker  crude  oil  deals 
in  the  Middle  East  during  this  period  of  time? 

A     Yes.   And,  you  know,  if  a  deal  had  gone  through, 
we  would  have  worked  out  some  sort  of  arrangement,  depending 
on  who  did  what. 

Q     And  would  it  also  be  a  fair  observation  to  say 
we're  talking  about  a  fair  amount  of  money  in  these  deals 
as  well?   The  one  on  page  79,  for  example,  is  200,000 
barrels  a  day  or  12  million  barrels,  at  a  time  when  the  price 
was  in  the  $25  a  barrel  price  range. 

A     Yes.   But  those  are  the  kind  of  purchases  that 
refineries  do  make. 

Q     Sure.   Which  makes  it  very  attractive,  if  there's 
a  possible  financial  venture. 

A     But  a  lot  depends  on  how  the  deal  is  structured, 
what  you  get  out  of  it. 

Q     Is  it  your  testimony  that  no  deal  like  that 
ever  went  through  for  you? 

A     No  deal  went  through. 

Q     Do  you  know  whether  any  deal  of  that  level  ever 

went  through  for  Hakim?  ' 

A     I  never  heard  him  say  he  put  one  through.  j 





Or  Ledeen? 

No,  I  never /Ledeen  say  he  put  one  through. 



Q     Looking  at  page  5  inthe  Aspin  file,  a  letter 
written  to  "The  Observer"  by  yourself,  it  refers  to  a 
chance  encounter  with  Ghorbanifar.   If  I  haven't  misunderstood 
you,  your  encounter  with  Ghorbanifar  wasn't  exactly  a  chanie 
encounter;  you  were  specifically  to  meet  with  him. 

A     I  went  there   to  meet  with  an  Iranian,  not 
identified.   I  didn't  expect  to  meet  Ghorbanifar. 

Q     But  it  was  not  by  chance  that  you  met  him.   It 
was  by  design.   It  just  wasn't  known  to  you  which  Iranian 
contact  you  were  to  meet. 

A     Well,  I  didn't  expect  to  meet  Ghorbanifar,  because 
I  thought  I  was  going  to  meet  somebody  from  Iran.   The  first 
person  I  met  is  Ghorbanifar,  who  was  living  in  Western 
Europe  and  is  not  a  current  vintage  Iranian. 

Q     But  he  was  produced  for  you,  specifically  for 
the  purpose  by^^^^^^H  wasn '  t  he? 

A   ^^^^^^Hintroduced  us  to  him,  and  then  it  turned 
out  that  Ghorbanifar  was  the  individual  who  brokered  the 
meeting  with  the  Iranians  from  Iran.   But  I  hadn't  expected 
to  meet  Ghorbanifar. 

:f-nDaAL  afratrus.  inc 




Q     It  was  your  understanding,  Ghorbanif ar ' s  role 
at  the  meeting  was  simply  to  act  as  a  go-between  between 

A     Yes.   I  had  no  anticipation  of  meeting  Ghorbanifar. 
In  other  words ^^^^^^^Htold  us,  "I  want  to  introduce  you 
to  some  interesting  people  from  Iran." 

So  my  mind  set  was,  whoever  we  were  going  to 
met  was  going  to  be  coming  from  Iran.   But  the  first  guy 
he  introduces  us  to  is  Ghoribanifar,  who  is  an  Iranian 

So  to  me,  that  was  a  chance  encounter.   I  mean, 
I  had  no  intentions  of  meeting  Ghorbanifar.   And  as  far 
as  I  know,  he  didn't  have  any  intention  of  meeting  me. 

Q     Well,  he  had  the  intention  of  meeting  an 

A     Well,  you  know,  that's  what  I  don't  know,  what 
his  arrangement     with^^^^^^fwhat^^^^^Hhad  told 
him  whc^^^^^^^^^^Lnd  I  were  that  were  coming  into  this 
particular  meeting.   But  as  far  as  I  was  concerned,  the 
meeting  with  Ghorbanifar  was  purely  by  chance.   I  didn't 
expect  to  meet  him.  1 


Q     All  right.   If  you  choose  to  call  that  a  chance   I 


,  fttKMTCM.  INC. 





A     Yes.   What  I'm  trying  to  say  is,  I  was  focusing 
on  meeting  somebody  from  Iran,  not  a  Ghorbanifar  type, 
whether  it  was  Ghorbanifar  or  Mr.  Blue  or  Mr.  Green  or 

Q     What  is  a  "Ghorbanifar  type"? 

A     That's  an  exile  living  in  Europe. 

Q     I'm  looking  at  page  197.   I  don't  want  to  spend 
any  time  looking  at  it.   It  refers  to  a  contact  with  Air 
Force  personnel,  and  I  gather  from  it  that  you  were  a 
lecturer  from  time  to  time  on  counterinsurgency  in  low- 
intensity  conflict. 

A     That's  correct. 

Q     Do  you  have  other  similar  roles  with  other 
government  agencies? 

A     Not  any  more.   I  have  pretty  well  given  that  whole 
thing  up.   You  know,  I  can't  afford  any  time. 

Q     When  you  were  doing  it,  were  you  doing  it  for 
others  besides  the  Air  Force? 

A     The  Air  Force  and  Eglin  Air  Force  Base  and 
Maxwell  Field.   I  was  supposed  to  go  out  to  Fort  Leavenworth 
at  the  College  there,  but  something  happened,  and  I  couldn't 

a^nauM.  mmwuhs.  inc 




keep  that  one. 

Q     Have  you  some  channel  to  Nicaragua,  or  did  you 
have,  in  1984? 

A     No,  I  have  no  channel  to  Nicaragua. 

Mr.  Jameson  has  been  in  touch  with  a  number  of  — 
what  are  you  referring  to? 

Q     Well,  I'll  show  you.   It's  pages  203  and  204,  and 
it  refers  to  an  oil  deal  in  Guatemala.   Are  you  familiar 
with  the  discussion  involving  that  oil  deal? 

A     Well,  I'd  have  to  see  that  to  see  which  one 
you're  referring  to. 

Q     This  meeting  with  Givardo  somebody  and  Felix 

A     There  was  a  meeting  between  Mr.  Jameson  and  these 
people,  and  I  remember  that  there  was  a  discussion  of  oil 
activity.   That  was  at  a  time  when  Guatemala  was  just  coming 
into  the  world  oil  market. 

MR.  MC  KAY:   You  said  Nicaragua.   Did  you  mean 

MR.  HOLMES:   Yes. 

Q     What  was  it  about  the  Foreign  Corrupt  Practices 





Act  that  caused  Mr .  Jameson  pause? 

A     Well,  I  thi-ik  he  wanted  to  make  sure  that  whatever 
was  done  was  no  violation  of  the  Foreign  Corrupt  Practices 
Act.   That's  basically  what  he's  saying  there. 

Q     Did  he  discuss  with  you  that  he  felt  in  some 
way  impinged  by  the  Foreign  Corrupt  Practices  Act? 

A     No.   But  this  is  a  standard  kind  of  thing  you 
need  to  be  concerned  about  when  you're  looking  at  concessions. 
His  concern  was  what  was  Mr.  San  Pedro's  position  in 
relationship  to  the  Guatemalan  government. 

Q     I  can  imagine  his  concern. 

A     Yes. 

Q     Now  on  the  next  page,  in  the  middle  of  the  second 
paragraph,  it  says,  "I  mentioned  my  interesting  channel 
to  Nicaragua  and  proposed,  which  he  accepted,  to  pass  word 
of  this  on  to  Daniel  Ortega  via  Senor  Lopez  to  see  whether 
that  might  help  in  getting  at  least  the  crew  and  other 
personnel  freed."  talking  about  the  crew  of  a  ship  seized 
off  the  Pacific  coast  of  Nicaragua. 

A     That  was  a  ship  belonging  to  San  Pedro  that  was 
seized,  I  believe;  right? 

Q     I  believe  so. 

t-naaoL  HPOtms.  inc. 





A     And  Jameson  had  a  contract,  I  think  —  I  don't 
know  whether  he's  still  got  it  —  with  the  people  that  put 
him  in  touch  with  Daniel  Ortega. 

Q     What  is  this  "interesting  channel"? 

A     That's  what  he's  talking  about,  the  person  who 
put  him  in  touch  with  Daniel  Ortega. 

Q     Who  is  it? 

A     I  think  it's  a  woman  by  the  name  of  Jahilma,   I 
don't  know  how  to  spell  it.   We'll  just  have  to  go 
phonetically.   It  might  be  something  like  J-a-h-i-1-m-a. 

Q     What  was  her  role  in  the  Nicaraguan  government? 

A     I  don't  think  she  has  any  role  in  the  government. 
I  think  she's  a  longtime  friend  of  Daniel  Ortega,  a  female 

Q     Do  you  know  whether  she  has  been  contacted  in  the 
last  year  and  a  half  by  Secord,  Clines,  Contaro  Company? 

A     To  the  best  of  my  knowledge,  they're  not  aware  of 
her  existence. 

Q     On  page  215,  we  find  reference  in  the  Nava  file, 
the  International  Security  Consortium  that  we  have  already 
discussed.  Mr  Jenkowitz. 

Jenowitz . 





Q  Jenowitz? 

A  Yes. 

Q     Had  been  contacted  by  Mr.  Nava,  who  was  interested 
in  discussing  the  concept  of  an  International  Security 
Consortium  with  Mr.  Nava  and  Mr.  Radai,  which  Mr.  Nava  and 
Mr.  Radai  are  pushing. 

My  question  is,  is  that  the  same  consortium  we 
talked  about  earlier? 

A     Right,  the  same  consortium. 

Q     Which  nations  were  planned  to  be  involved  in 
that  consortium? 

A     Well,  I  think  they  were  just  taking  soundings  at 
that  pirticular  point  in  time.   I  think  the  United  States, 
Canada,  Britain,  Israel. 

Q     I'm  reading  on  page  302,  a  memorandum  for  the 
record  by  yourself,  memorializing  the  fact  that  a 
Mr.  Ferrera  contacted  you  and  discussed  an  Iranian  arms 
purchase  through  Portugal. 

Do  you  recall  that? 

A     Let's  see.   I  don't  think  it's  an  arms  — 

Q     It  says  "Iranian  arms  purchases." 


.cf-nDUAi.  (iratTEns.  inc 





Q     Who  is  Mr.  Ferrara? 

A     He  is  a  Portuguese  fellow  who,  I  think,  probably 
has  dual  citizenship.   He  lives  part  of  the  time  in  England 
and  part  of  the  time  in  Portugal.   You'll  see  he  has  been 
involved  with  me  in  attempting  to  do  an  oil  deal  with 

Q     All  right.   This  memorandum  also  refers  to  a 
Mr.  Chartier  in  Paris. 

A     Right. 

Q     Is  he  not  a  representative  of  Trans-World  Oil? 

A     Yes,  he  was  employed  by  Trans-World  Oil  at  that 
time  in  Paris. 

Q     And,  if  I  understand  what's  going  on  here,  Iran 
is  purchasing  arms  and  needs  the  cash  to  do  so  and  is  raising 
the  cash  by  selling  oil? 

A     Yes.   But  those  aren't  necessarily  linked. 

Q     Well,  they're  deliberately  unlinked,  according  to 
other  memoranda;  correct? 

A     No,  they're  not  deliberately  unlinked.   It's  just  ; 
that  most  oil  companies  will  not  link  themselves  to  any 
specific  transactions  dealing  with  weapons.  You're  selling  • 
oil.   If  the  country  then  who  sells  the  oil,  Iran,  generates} 

cf-rfBOUi  ■wwm*.  inc. 





cash  from  that  and  then  decides  to  buy  weapons,  then  that's 
what  they  do. 

Q     But  as  a  matter  of  practicality  —  and  it's 
reflected  in  maybe  memos  within  this  little  packet  here  — 
certainly  some  of  these  memos,  if  they  don't  get  the  oil 
sold,  they  don't  get  to  buy  the  weapons. 

A     That's  a  problem  for  them.   Their  main  export  is 

Q     Sure.   And  : the  big  dollar  import  is  weapons. 
So  the  two  are  inextricably  linked  in  economics? 

A     Yes ,  but  not  necessarily  in  the  transactional 
sense . 

Q     Now,  this  memo  on  page  302  also  refers  to  a 
Nigerian  deal.   Does  this  Nigerian  oil  deal  have  any 
connection  at  all  with  the  previous  Nigerian  oil  deal  we 
saw  involving  Ledeen? 

A     No. 

Q     Is  it  structured  in  the  same  way? 

A     I  don't  think  so.   No.   This  is  an  entirely 
different  kind  of  a  proposition.   I  forget  what  year  that 
was.   Remember,  looking  at  the  previous  one,  this  is  '86. 
In  the  meantime,  there  have  been  one  or  two  coups  in 

a-nauH.  umiteiis.  inc 





Nigeria  and  part  of  the  problem  here  was  to  open  up  a 
dialogue  with  a  new  government  in  Nigeria  on  oil  matters. 

Q     Who  is  Fatanmi? 

A  He  was  some  individual  —  I  don't  know  him.  He 
was  some  individual  Mr .  Ferrara  was  recommending  to  me  or 
mentioned  to  me . 

Q     And  this  Dr.  Fatanmi  is  somebody  you  were  hopii^g 
would  put  in  touch  with  the  new  government  in  Nigeria,  in 
order  to  broker  oil? 

A     Open  the  door  for  oil  discussions .  Does  it 
mention  Babaginda  in  here?  Yes,  by  this  time,  Babaginda  — 
General  Babaginda  had  become  the  head  of  the  government  in 

Q  So  the  commercial  triangle  that  his  refers  to  is 
Nigerian  oil,  a  Portuguese  refiner,  and  Trans-World  is  the 
ultimate  purchaser  of  the  refined  product;  is  that  correct 
or  not? 

A     That  was  true  on  the  Iranian  oil.   The  Nigerian 
was  simply  to  open  the  door  with  the  Nigerians,  to  start  a 
discussion  with  them.   It  was  not  structured  in  the  same 




Q     And  if  the  door  was  opened,  what  would  be  done? 

A     Depending  on  what  could  be  negotiated.   In  other 
words,  what  did  the  Nigerians  have  to  sell,  how  much,  what 
were  they  willing  to  do.   You  know,  back  in  one  of  these 
other  things  I  think  you  see  I  did  try  earlier  on  in  some 
earlier  period  to  deal  with  the  Nigerians  through  the 
Portuguese,  but  it  didn't  turn  out  to  be  possible.   This  is 
simply  an  attempt  to  see  if  Mr.  Ferrara  had  any  contacts 
with  the  Nigerians.   It  was  not  structured  to  the  Portuguese 

Q     You  were  in  touch  with  the  Portuguese  on  a 
broader  range  of  issues  than  simply  oil  and  oil  refining, 
weren't  you? 

A     No. 

Q     There ' s  a  memo  here ,  page  3  of  3 ,  in  which  you ' re 
talking  about  training  the  Portuguese  VIP  protection  — 

A     That  was  with  Mr.  Ferrara. 

Q     The  same  guy? 

A     Yes.   He  asked  me  one  time,  if  it  would  be 

possible  for  me  to  put  on  that  kind  of  a  program. 


Q     Now,  Ferrara  is  a  quasi-government  official,     ; 
isn't  he?  He's  president  of  Disarma,  which  is  their      ; 

•*-*aU»L  UNKTEIS.  INC 






stat^-owned  -- 

A     I  think  he  is  a  representative  of  their  state-owned 
company.   He  has  an  independent  company,  as  I  understand  the 

Q     This  page  303  refers  to  him  as  president  of 


A     Right,   And  I  think  Disarma  is  an  independent 
trading  company.   I  don't  believe  it's  ovmed  by  the 

Q     Did  you  look  into,  as  a  matter  of  fact,  training 

VIP  protection  units? 

A     I  talked  to  one  or  two  people  here  in  the  States, 
who  would  have  helped  me  put  together  a  program,  but  it 
never  worked  out,  timewise. 

Q     Now,  page  305  is,  I  think,  what  you  were  talking 
about  a  moment  ago  in  the  Petrogal/Iran  crude  deal? 

A     Yes. 

Q     And  Petrogalwas  doing  the  refining  and  Trans-World 
was  doing  the  purchasing  of  the  refined  product? 

A     Right . 

Q     So,  as  of  early  '86,  you  were  financially  in  the 
business  of  dealing  in  Iranian  crude? 





A     That  deal  was  a  product  deal.   Petrogal  would 
refine  it,  and  we  would  take  the  refined  product. 

Q  But  unlike  the  unlinked  arms  deal  we  were  talking 
about  before,  this  is  totally  linked?  No  crude,  no  refined 

MR.  MC  KAY:   Linked?   It's  just  an  oil  deal. 

Q     The  linkage  between  the  refined  product  and  the 
crude . 

A     Yes.   The  Iranian  crude  is  sold  to  the  refinery. 
The  refinery  refines  it,  gets  a  fee,  sells  the  product  to 
a  distributor  like  Trans-World,  who  then  puts  it  in  the 
European  market  hoping  to  sell  it  for  a  profit. 

Q     In  this  particular  deal.  Trans  World  wouldn't  be 
obliged  to  pay  anything  until  the  refined  product  was 

A     Yes;  that's  correct. 

Q     And  it  wouldn't  be  delivered  unless  the  Iranians 
delivered  on  their  part. 

A     Right. 

Q     Isn't  it  true  that  it  was  during  that  period  of 
time,  early  1986,  the  Iranians  were  desperately  in  need  of 





funds  from  their  oil  production? 

A     Basically,  in  the  last  couple  of  years,  they  have 
always  been  desperate  for  funds,  and  they  had  ebbs  and  flows 
of  desperation.   They  would  send  delegations  out. 

Q     Reading  from  page  307  now,  this  is  a  memo  written 
and  initialed  by  yourself  on  the  Petrogal  deal.   It  says: 
"Mr.  Shackley  told  Mr.  Chaurtier  this  might 
not  be  the  end  of  the  deal  for  Mr.  Ferrara. 
I  just  returned  from  a  meeting  with  the 
Iranians  in  Switzerland.   The  Iranians 
were  saying  they  needed  funds  desperately 
and  wanted  to  put  through  an  oil  deal  with 
Portugal.   The  Iranians  had  also  told 
Mr.  Ferrara  that  if  they  could  not  put 
through  such  a  deal,  they  might  not  be 
able  to  buy  munitions  from  his  firm." 
That's  Ferrara' 8  firm.   So  the  Portuguese  needed 
the  Iranians  to  be  able  to  deliver  crude,  so  that  the 
Portuguese  could  sell  the  Iranians  munitions? 

A     Yes.   But  I  think  what  I  was  focusing  on  was  the 
desperation.  What  I  was  trying  to  question  was  to  say  that 
there  are  these  ups  and  downs  and  during  this  last  couple  of 

ct-raoui  •iracTUS.  inc. 


years  there  certainly  have  been  a  lot  of  those  periods.   That's 
what  I  was  trying  to  get  across,  because  you  were  sort  of 
zeroing  in  on  that. 

What  I  was  trying  to  say  is  that  that  is  not  an 
isolated  case. 

Q     Oh,  no,  I  didn't  mean  to  imply  that,  it's  an 
isolated  case.   I'm  just  pointing  out  for  the  committee's 
purposes  that  Portugal  wasn't  simply  a  disinterested  bystander 
in  all  of  this.   They  were  commercially  entwined  with  Iranian 
oil  and  that  they  wanted  to  sell  arms  to  Iran  and  needed  to 
have  the  countertrade  occur,  in  order  for  that  to  happen. 

A     Yes.  That's  part  of  their  equation. 

Q     Did  Mr.  Ferrara  ever  get  a  finder's  fee  or  any 
such  like  from  Trans-World? 

A     No.   Because  no  deal  went  through. 

Q     But  if  it  had  gone  through? 

A     If  a  deal  had  gone  through,  we  would  have  to  have  to 
have  given  him  a  fee. 

Q     How  are  those  fees  arranged? 

A     In  what  sense? 

Q     Physically,  how  are  they  made? 

A     He  would  have  gotten  some  percentage ,  depending  on 






what  the  valuation  was  and  would  have  gotten  a  check. 

Q     Did  you  ever  discuss  with  Trans-World  the  concept 
of  doing  Iranian  crude  deals  via  European  cut-outs,  so 

A     Let  me  see  what  you  have  reference  to,  because  I 
don ' t  know  whether  — 

Q     Why  don't  you  take  a  look  at  page  332,  titled 
"Iranian  Crude  Deals  Via  European  Cutouts." 
(A  pause.) 

A     yes.   It  talks  about  a  storage  agreement  and  using 
places  like  Portugal  as  a  way  of  putting  those  together,  as 
a  sale. 

Q     What  is  the  applicability  of  the  term  "cutout"  to 
this  arrangement? 

A     It's  simply  the  Portuguese  entity  is  in  between 
Iran  and  the  person  who  gets  the  end  product,  the  refiner. 

Q     Well,  maybe  I'm  reading  something  into  it  from  the 
vocabulary  that  we  have  been  introduced  to  on  this  committee, 
but  when  I  heard  the  word  "cutout"  used,  it's  in  the  context 
in  which  the  parties  on  either  end  of  the  transaction  don't 
want  to  have  some  connection  made  between  them.   The  party 
in  between  is  called  the  "cutout." 


icf-nDouu.  *fra«THs.  im 




Am  I  to  gather  that  Trans-World  is  somehow 
unwilling  to  have  it  be  known  that  they're  buying  Iranian 
crude,  or  is  that  just  a  misfortunate  use  of  the  wor^d? 

A     I  think  it's  a  mis£ort\inate  use  o£  the  wof||ii. 
Your  definition  of  "cutout"  involving  the  intelligence 
context  is  correct.   This  is  an  entirely  different  context. 
In  the  oil  trading  business,  it's  just  somebody  in  between 
that  the  producer  and  the  eventual  seller  of  the  refined 
product . 

Q     What  aren't  they  referred  to  the  intermediary 

A     Maybe  my  vocabulary  has  been  corrupted  by  30  years 
of  the  government.   I'm  sure  that's  permitted. 

Q     In  the  deal  that's  under  consideration  in  this  memo 

of  June  '85,  is  there  seme  commercial  purpose  for  using 
Portugal,  when  Portugal  would  be  able  to  turn  around  and 
resell  the  crude  without  ever  having  teJcen  delivery? 

A     What  period  of  time  was  that  again? 

Q     June  '85. 

A  It  might  have  been  a  time  when  Iran  would  have  been 
more  willing  to  sell  to  a  small  country  like  Portugal  than  it 
would  have  been  to  some  other  countries. 

£i-aBaua.  mkwtui.  inc. 





Q     Like,  for  example,  the  United  States? 

A     Or,  say,  at  this  particular  point  in  time,  they 
might  not  have  been  willing  to  sell  to  France. 

Q     So  they  were  willing  to  deal,  say,  apparently 
Ireland  is  mentioned  in  here. 

A     That's  another  one  which  we  were  aware  of  that  had 
transpired.   We  played  no  role  in  that.   I  think  what  I  was 
saying  is  that  we  had  heard  of  such  a  deal;  is  that  correct? 

Q     Yes.   It's  just  a  reference  to  it  here  as  another 
deal  the  Iranians  had  done  by  the  same  general  method.   They 
recently  concluded  a  transaction  of  this  type  with  the  Irish 
National  Petroleum  Corporation  in  Dublin,  which  worked  out 
to  everyone's  satisfaction. 

A     Right. 

Q  Is  it  an  unspoken  understanding  in  this  memo  that 
the  23  U.S.  dollars  a  barrel  is  going  to  be  different  than 
the  world  price  of  oil  at  the  time? 

A     No.   Let  me  read  that.   I  don't  — 

Q     Go  ahead  and  read  it.   It  says: 

"The  Iranians  will  sell  the  crude  to 

Portugal"  — 
I  don't  know  how  to  pronounce  that  — 





" —  for  23  U.S.  dollars  a  barrel  or  some 
other  agreed-on  price.   At  this  price 
level,  Portugal  would  be  able  to  sell 
the  crude  at  a  profit." 
Meaning  that  this  a  price  below  the  existing 
world  price? 

A     It  could  have  been  a  dollar  below  the  market  that 
the  Iranians  were  discounting  at  that  particular  time. 
Q     And  their  motive  for  discounting  it  is  what? 
A     To  move  it.   In  other  words,  to  move  it  or  to 
increase-  their  sales  to  new  markets  in  excess  of  their 
quota,  their  OPEC  quota,  finding  new  markets  which  will 
take  their  crude  and  increase  their  volume  and  get  more 
revenue . 

Q     So  here  again  is  the  OPEC  quota  problem  that's 
being  circumvented? 

A     The  OPEC  quota  is  constantly  a  problem  to  the 
producers . 

Q     All  right.   And  is  it  true,  from  your  knowledge 
of  this  deal  —  and  I  gather  you  have  knowledge,  you  have 
written  this  memo  —  that  this  $23  price  is  a  —  I  don't 
wamt  to  say  your  official  price,  but  as  an  economist,  an 


.  MFoams.  INC 




OPEC  quote  is  not  an  artificiality. 

A     My  guess  is,  that  probably  represents  some  sort  of 
a  discount  at  that  particular  time.   But,  you  know,  to  get  a 
real  ironclad  definitive  answer,  it  would  take  hours  of 
research . 

Q     I  gather  that  from  time  to  time  you  have  had 
requests  for  referrals  relating  to  armaments  and  have  made 
the  appropriate  referrals? 

A     I  think  I  told  you  that  I  personally  have  never 
handled  anything  that  booms  or  bangs.   Now,  if  somebody  comes 
to  me  with  something  like  that,  I  refer  it  to  somebody  else 
as  a  courtesy  or  favor. 

Q     And  that  would,  I  assume,  apply,  especially  for 
Portugal,  since  you  were  dealing  with  Portugal  on  a  regular 

A     I  was  dealing  with  Mr.  Ferrara  and  Petrogal.   Those 
are  the  limits  of  my  real  contact  with  Portugal. 

Q     Did  you  ever  have  any  contacts  with  a  company 
named  Defex  —  D-e-f-e-x? 
A     No. 

Q     Did  you  ever  have  any  contact  with  an  individual 
ncimed  Brito  —  B-r-i-t-o? 

■ct-foajt.  lEraiTEis.  INC 





A     No. 

Q     Or  a  Jose  Carnel? 

A     No. 

Q     I  wonder  if  you  considered  a  finder's  fee  possible, 
when  you  made  referrals  on  munitions  deals? 

A     I  never  got  any  finder's  fee.   I  mean,  if  I  had 
referred  such  a  deal  to  somebody,  and  they  had  given  me  a 
finder's  fee,  I  probably  would  have  accepted  it,  but  I 
don't  think  I  ever  got  one.   I  know  I  didn't  get  any  finder's 

Q     Looking  at  page  337,  it  says,  at  the  end  of  the 
memo  about  a  referral  of  a  Thai  military  ammunition 
requirement . 

"If  scMnething  contes  from  this  from  the 
Thai  side,  there's  a  finder's  fee  in 
this  package." 
That's  a  fee  for  you;  right? 

A     Probably,  if  the  Thais  had  pulled  it  off  or 
something,  I  would  have  expected  that  somebody  would  have 
said,  okay,  he  helped  us  put  a  deal  together,  what  can  we 
do  for  you?  Probably  a  finder's  fee. 

Q     And  this  is  just  the  way  the  international 






business  community  works? 

A     Right. 

Q     So  sort  of  daisy  chains  on  daisy  chains? 

MR.  MC  KAY:   Is  "daisy  chain"  a  term  that  you  use? 
THE  WITNESS:   Yes.   "Daisy  chain"  is  an  industry 
term  in  the  oil  industry. 

Q     What  is  BYIEX  Trading  Company  —  B-Y-I-E-X? 

A     I  think  that  was  a  company  that  Ghorbanifar  said 
he  was  the  president  of  or  that  he  represented. 

Q     Did  he  say  what  they  did? 

A     No. 

Q     Do  you  know  if  it  exists? 

A     I  think  somewhere  in  there,  there's  some  — 

Q     I  think  you  did  a  check  or  something. 

A     No.   I  think  it  turned  out  that  he  really  didn't 
have  anything  to  do  with  the  company. 

Q     Here  on  page  470,  somebody  is  answering  you 
back  that  there  is  no  record  of  any  Ghorbanifar  in  Paris, 
and  inquiries  in  local  oil  circles  have  failed  to  identify 
Ghorbanifar  as  being  a  trader  or  intermediary  for  Iranian 
oil  or  crudes. 

E-moAi  afraims.  inc. 





Who  is  this  answering  this  back? 

A     That's  a  fellow  in  Geneva  who  does  checks  for  me, 
that  works  for  me. 

Q     Who  is  he? 

A     Well,  his  name  is  Gerber,  Conrad  Gerber. 

Q     Did  you  ever  find  out,  to  the  contrary? 

A     To  the  contrary,  what? 

Q     Did  you  ever  find  out  that  Gerber  is  wrong  about 
this,  and  Ghorbanifar  was  involved  in  crude  oil  deals? 

A     No. 

Q     So  if  he  was  dabbling  oil  and  his  real  business  is 
arms  — 

A     I  don't  know  what  his  real  business  is,  because  he 
did  not  introduce  himself  to  me  as  an  arms  dealer,  and  I 
think  if  you  read  through  those  memos,  you  know  that  my 
inquiries  about  him  show  that  the  people  1  .talked  to 
certainly  did  not  know  him  as  an  arms  dealer. 

Q     Did  you  ever  confirm  that  Ghorbanifar  had  worked 
for  SAVAK? 

A     Yes. 




Q     When  you  were  talking  with  Ghorbanifar,  what 
specific  Soviet  equipment  did  you  refer  to? 

A     I  don't  have  any  recollection  of  that,  that  it  was 
just  Soviet  equipment. 

Q     Do  you  know  whether  it  was  tanks? 

A     That  I  can't  —  if  it  had  been  something  specific, 
I  would  have  written  it  down.   What  did  I  say?   Soviet 

Q     "Interesting  Soviet  equipment 
A     That's  probably  as  close  a  translation  of  what  he 
told  me  as  I  could  capture. 

Q     I'm  going  to  have  you  read  this  sentence  on  page 
478.   I'll  read  it  to  you,  so  the  record  will  pick  it  up. 
It  says: 

"On  the  other  hand,  the  new  oil  companies 
could  be  generous,  and  if  there  was  a 
humanitarian  deal  to  be  made,  in  simply 
terms,  with  adequate  safeguards  for 
life  and  funds,  we  woulc  i^e  willing  to 
take  soundings  with  our  oil  company 
clients  and  contacts,  to  see  if  a  deal 
could  be  structured." 

ct-mouL  Mfomn.  inc 




Forgive  me,  if  I'm  reading  more  into  it  than  exists, 
but  it  sounds  to  me  that  you're  talking  a  little  bit 
euphemistically . 

Could  you  tell  me  what  you  mean  here  by  "oil 
companies  could  be  generous"? 

A     Well,  you  have  to  put  that  into  some  context. 

Q     Yes.   That;s  why  I'm  asking  you  the  question,  so 
you  will  do  that. 

A     Yes.   The  context  was,  he  raised  the  question  of 
the  Americans  in  Lebanon. 

Q     Yes.   This  is  right  at  the  end  of  your  memo  on 

A     I  responded  by  saying  that  it  would  be  interesting 
to  find  out  what  the  status  was.   He  flippantly  said,  "I 
assume  you're  talking  about  tractors  for  prisoners  exchange." 
And  I  said,  "I  don't  have  anything  specific  in  mind." 

Q     When  he  says  "tractors,"   he's  talking  about 

A     No.   Tractors.   I  think  what  he  was  talking  about 
was  the  John  F.  Kennedy  exchange  of  tractors  for  Cubans  at 
the  Bay  of  Pigs.   It's  a  well-known  international  trans- 
action and  most  people  referred  to  that.   So  I  think  he's 

(■OBtmL  KN«TUS.  INC 





a  very  flip  kind  of  guy,  and  so  when  he  says,  "Wel^,  oO  we're 
talking  about  tractors?"   And  I  said,  "No,  we're  not  talking 
about  anything.   I'm  interested  in  oil,  and  if  some  sort  of 
deal  can  be  structured  for  humanitarian  terms,  and  so  forth 
and  so  on,  that's  something  I'll  take  up,  or  I'll  take  up 
with  our  oil  ccxnpany  clients  and  contacts,  if  a  deal  could 
be  structured." 

I  wasn't  going  to  commit  myself  to  anything. 

Q  Spell  it  out  for  me,  because  I'm  still  not  —  1 
don't  understand  what  Ghorbamifar  means.  Tell  me  exactly 
what  you  mean  by  that. 

A     Well,  that's  an  elliptical  response  to  an 
elliptical  question.   There's  nothing  to  explain.   He  says, 
"Tractors  for  prisoners,"  and  I  say,  "No,  I'm  not  thinking 
of  anything,  but  people  can  put  these  kind  of  deals 
together,  and  if  you  know  something  specific,  I'll  consider 
it.   I'll  take  soundings." 

Q     What  role  were  the  oil  ccanpanies  supposed  to  play 
in  this? 

A     I  think  that  was  an  elliptical  response  on  my 
part,  simply  to  the  exchange  that  was  going  on  at  that 
particular  point  in  time.   In  other  words,  as  you  can  see 





by  my  actions,  when  he  qualified  this  thing,  and  what  I  did 
was  write  a  memo  and  go  to  where  I  thought  was  appropriate. 

Q     To  the  U.S.  government? 

A     And  specifically  to  the  State  Department.   And  I 
still  think  that's  the  right  thing  to  do. 

Q     Did  you  ever  make  any  person  affiliated  with 
any  oil  ci^npany  aware  of  this  situation? 

A      No. 

Q     Of  course,  other  than  yourself,  because  you 
were  there  on  Trans-World  Oil  business  at  the  time.   But 
I  mean,  other  than  yourself,  did  you  mean  this  sentence 
about  oil  companies  to  i]nply  to  Ghorbanifar  that  you  would, 
in  fact,  contact  any  oil  companies? 

A     No.   I  told  you,  he  was  being  flip,  and  I  don't 
know  how  else  to  put  it.   He  was  being  flip,  gave  me  a 
flip  response,  and  I  gave  him  an  elliptical  response, 
noncommittal.   In  other  words,  I  would  look  into  it.   People 
can  be  generous,  you  know,  something  aJsout  these.   It's 
a  humanitaurian  thing,  you  know,  sit,  discuss  it,  and  we'll 
look  into  it,  and  I  will  take  note  of  it.   That's  not  a 

Q     Oh,  I  understand  that.   I'm  wanting  to  know  why 

u-nooui  itratTUS.  inc 





you  were  referring  to  oil  companies  a  couple  of  times. 

A     Because  we  had  talked  about  oil,  and  my  rationale 
for  engaging  in  the  dialogue  was  to  orient  myself  on  the 
general  Iranian  market,  which  is  a  very  substantial  factor 
in  the  oil  industry,  and  I  wasn't  making  any  secret  of  that. 
There  was  no  reason  for  me  to  make  any  secret  of  it.   You 
know,  conversely,  I  had  nothing  specific  to  deal  with  at  that 
point  in  time.   In  other  words,  he  hadn't  said  that  the 
following  two  guys,  one  guy,  two  guys,  three  guys,  are 
available.   He  just  made  this  generic  statement,  so  I  made 
an  elliptical  response,  which  is  the  noncommital  to  keep  the 
dialogue  going.   Nothing  more  complicated  than  that. 

Q     So  you  wanted  him  to  understand  that  you  picked 
up  his  feeling  as  a  commercial  person  that  the  hostages 
were  an  obstacle  to  trading  between  the  West  and  Iran? 

A     No.   I  had  no  broader  motives.   I  think  you're 
ascribing  to  me  something  broader.   You  are  trying  to  make 
something  out  of  this  that  wasn't.   It's  a  very  quick, 
flip  exchange,  that's  all,  and  I  wanted  to  keep  the  dialogue 
open  and  told  him  that  it  was  a  humanitarian  item,  if  he 
would  do  something  about  it,  could  do  something  about  it,    j 
that  this  would  be  something  I  would  be  interested  in 







listening  to. 

Q     You  said,  .in  response  to  a  previous  question, 
you  made  no  bones  about  being  interested  in  oil. 
A     Right . 

Q     I  would  like  to  develop  oil-related  commerce. 
A     No,  I  wanted  to  be  informed  on  the  oil  market, 
in  terms  of  what  were  the  circumstances.   I  made  no 
commitment  that  I  was  going  to  buy  X  or  that  I  would 
pursue  Y  for  a  refinery  or  anything  else.   This  was  a 
feeling-out  process.   It  happens  all  the  time. 

Q     On  page  480,  the  same  set  of  memos,  you  say: 
"Ghorbanifar  has  no  known  intelligence 
connections  with  any  Western 
intelligence  service." 
What  is  your  source  of  that  information? 
A     Talking  wit^ 
Q     How  would  they  know? 

A     Well,  you  know,  this  is  the  kind  of  question  I 
put  to  them.   "What  do  you  guys  know  about  this  guy?   Have 
you  ever  heard  anything  about  him?" 

These  people  talk  about  each  other  all  the  time, 
and  there  is  an  international  grapevine.   I  just  wanted  to 

-.l-natUL  MNITtM.  INC 





know  if  he  had  heard  anything. 

Q     Had  you  put  out  any  feelers  to  any  Western 
intelligence  agencies,  before  you  wrote  that? 

A     No. 

Q     And  I  assume  that's  why  you  didn't  find  out  that 
he  had  connections  with  the  CIA? 

A     I  wouldn't  have  any  way  of  going  to  the  CIA, 
because  when  I  came  back,  you  can  see  the 'time.   I  was  rather 
prompt,  wrote  it,  hand-carried  it,  took  it  to  the  State 
Department,  and  I  deliberately  did  not  go  to  the  CIA.  'I 
had  no  reason  to  go  to  the  CIA. 

Q     I'm  going  to  ask  you  a  general  question,  and 
really  more  by  way  of  flagging  this  spot  in  the  transcript 
than  anyplace  else. 

This  file  folder  marked  "William  Buckley,"  which 
is  pages  459  through  489,  contains  your  memoranda  on  the 
subject  of  Ghorbemifar. 

A     Right . 

Q     And  these  are  the  memoranda  you  wrote  at  the  time? 

A     That's  correct. 

Q     On  the  subject  of  oil  pricing,  what  commercial 
value  would  the  information  have,  if  the  person  were  to  find' 

n-nocuu.  Mraims.  im 




f.JfL  , 
out  that  Iran  was  dealing  with  the  United  States  in  missiles, 

with  an  eye  towards  future  commercial  development? 

A     What  impact  would  it  have  on  the  oil  market? 

Q     Yes. 

A     None . 

Q     Zero? 

A     Yes.   My  initial  reaction  to  that  would  be  zerc3. 

Q     Why  is  that? 

A     Because  it  doesn't  change  anything.   If  you're 
dealing  with  the  United  States  on  missiles,  so  what?   I 
mean,  you  have  to  look  at,  would  that  change  the  balance  of 
the  power  in  the  war . 

Q     Well,  as  a  matter  of  fact,  the  price  of  oil  went 
up  quite  rapidly  after  August  of  1986,  didn't  it? 

A     Well, 'getting  to  the  period  of  August  '86,  when  I 
was  out  of  the  market,  this  is  a  time  when  I'm  finishing 
up  all  of  my  medical  testing,  and  so  forth.   I'm  getting 
ready  to  go  to  the  hospital,  so  I'm  beginning  to  be  out  of 
the  market  at  thfit  particular  point  in  time.   I  don't 
remember  any  large  surge  in  prices  just  before  I  went  to 
the  hospital. 

Q     What  knowledge  do  you  have,  if  any,  of  any  trading 

■■t'Oaait.  Mnarus.  inc 





done  in  oil-related  stocks  or  similar  transactions  by 
anybody  within  the  circle  of  those  who  knew  or  could  have 
known  about  this  Iranian  initiative? 

A     None . 

Q     You  have  heard  no  industry  riainors  that  there  was 
any  insider  trading  of  any  kind  relating  to  this  initiative? 

A     No,  I  haven't  heard  anything  like  that. 

Q     Do  you  know  a  guy  named  Maurice  Rehm  —  R-e-h-m? 

A     Yes. 

Q     How  did  you  first  contact  him? 

A     I  didn't  contact  him.   He  contacted  me.   From 
what  I  recall,  I  think  I  got  a  phone  call  from  Ambassador 
McCormack.   He  said  he  had  been  talking  to  this  fellow 
Rehm,  and  he  would  appreciate  if  I  would  talk  to  Rehm  and 
see  if  I  could  give  him  any  advice  as  to  what  he  should  do. 

Q     What  did  he  tell  you  Rehm  had  told  him? 

A     Nothing.   He  said  he  wanted  Rehm  to  come  over  and 
see  me,  and  I  made  some  arrangements. 

Q     Where  was  he  the  ambassador  at  that  time? 

A     I  believe  he  was  the  ambassador  to  the  OAS. 

You'd  have  to  check  that.   I'm  not  absolutely 
sure.   He  had  several  jobs  at  the  time.   He  was  an  assistant' 

Ct-mtMl  MNtTOn.  INC 






secretary,  and  I  don't  remember  what  period.   It  sticks  in 
my  mind,  he  was  the  ambassador  to  the  OAS. 

So  I  agreed  to  talk  to  Rehm.   Rehm  Ceime  to  my 
office,  introduced  himself,  told  me  a  little  bit  about 
himself  and  gave  me  some  papers,  the  copies  of  which  you 
have  there,  and  I  told  him  that  there  was  nothing  I  could 
do  for  him. 

He  had  some  interest  in  an  airline  in  Africa,  and 
I  told  him  the  place  to  work  on  that  was  with  the  State 
Department,  which  he  did. 

Q     You  had  never  heard  of  him  before? 

A     Never  heard  of  him. 

Q     And  his  other  interest  was  in  supplying  the 
contras  by  air  drop? 

A     Right.   And  I  told  him  I  had  nothing  to  do  with 
it,  I'm  retired,  I  can't  help  you. 

Q     He  supplied  you  with  a  proposal;  is  that  right? 

A     Right.   He  insisted  on  leaving  those  papers  with 

Q     This  is  August  of  '86.   It  was  actually  earlier. 
His  close  out  letter  to  you  is  August  '86. 


vCf-nooM.  acMtTus.  inc. 





Q  His  first  contact  was  more  like  July  of  '86.  He 
had  a  business  called  Connor  Airlines;  is  that  right? 

A  I  don't  think  that  was  his  business.  I  think  he 
worked  for  or  was  associated  with  Connor.  I  think  there's 
some  data  on  Mr.  Connor  in  there. 

Q     Yes.   What  did  he  tell  you  about  Connor. 

A  He  said  he's  an  independent  air  operator,  very 
capable,  had  the  capacity  to  expand  his  air  facility  and 
was  interested  in  being  helpful. 

Q  Do  you  know  anything  more  about  the  Regina  Group 
Limited  and  the  fact  it  occurs  on  Mr.  Rehm's  business  car? 

A     All  I  know  is  right  there. 

Q     Now  I  gather  that  it  has  made  some  impression  on 
you.   This  is  around  the  beginning  of  July  '86  that  you  had 
met  with  Mr.  Rehm,  since  you  immediately  wrote  a  memorandum 
to  the  file. 

A     Right. 

Q     And  you  referred  Rehm  to  Colonel  Ollie  North  in 

the  NSC;  right? 


A     What  did  I  say  there?  You  got  to  talk  to  somebody  " 
like  North  or  something  to  that  effect? 

Q     "In  view  of  this,  Mr.  Shackley"  —  and  this  is  you  '" 


tt-naaui.  umwtus,  iik 




writing  to  yourself  in  the  third  person  —  "felt  that 
the  only  advice  he  could  give  Colonel  Rehm  was  for  him  to 
try  to  see  Colonel  Ollie  North  in  the  NSC,  who  had  recently 
been  identified  in  the  press  as  the  main  player  in  whatever 
the  NSC  was  doing  to  provide  assistance  to  the  contras  of 
a  humanitarian  nature." 

A     Yes. 

Q     Now,   what  was  it  that  was  humanitarian  about 
Mr.  Rehm's  proposal? 

A     Well,  I  think  he  was  interested  in  doing  what  he 
could  to  be  helpful,  and  the  only  thing  that  was  going  on  at 
that  time  was  what  I  was  reading  in  the  papers. 

Q     Did  you  know  anything  further  about  this  contact 
by  Mr.  Rehm?  Contacting  any  other  government  people,  for 

A     No,  I  did  not. 

Q     He  gives  some  fairly  significant  information  in 
here.   He  names,  in  your  own  memo  on  page  433,  you  quote 
him  as  naming  Southern  Air  Transport,  Florida  West, 
Challenger  International  Cargo,  Caribbean  Cargo,  and  you 
go  on  further  to  say: 

"Colonel  Rehm  also  felt  a  number  of 

.{■fiociM.  Mrmrcn.  inc. 




these  airlines  were  doing  things 
that  could  be  embarrassing  to  the 
U.S.  government." 
Why  didn't  you  contact  anybody  in  the  government, 
if  you  felt  he  had  said  they  were  doing  something? 

A     I  had  no  reason  to.   I  didn't  want  to  get  involved. 
I'm  not  looking  for  involvement,  and  the  one  thing  I  have 
done  has  got  me  involved  with  more  than  I  want  to  be.   I 
got  a  humanitarian  piece  of  information  I  turned  in  and 
look  at  all  the  time  I  spent  with  you. 

In  any  event,  the  short  answer  to  your  question  is, 
I  did  nothing. 

Q     I  gather  that  Rehm  knew  Ambassador  McCormack 

A     That's  the  impression  I  had,  yes. 

Q     He  refers  to  him  in  his  letter  of  August  17,  which 
is  pages  417  through  419,  as  "Dick  ttcCormack." 
A     Yes. 

Q     Now  in  the  same  letter  on  page  418,  he  specifies, 
with  remarkeible  accuracy,  exactly  what  aircraft  are  being 
used  in  Central  America  at  that  time  by  Secord.   Of  course, 
he  doesn't  name  him.   He  says,  "I'm  pzurtially  aware  of  the 

E-ftscuL  imxms.  inc 





current  success  and  lack  of  same  with  respect  to  direct  air 
support  drop  missions  to  date." 
This  is  August  '86. 

"I  recognize  the  difficulties  inherent  in  trying 
to  maintain  and  operate  desert  relics,  such  as  Fairchild 
C-123,  C-7A/8A  Caribou/Buffaloes,"  et  cetera,  which  are  the 
aircraft  that  were  being  used  at  the  time. 

Did  you  inquire  of  him  how  he  knew  precisely  what 
aircraft  were  being  used? 
A     No,  I  did  not. 

Q     He  says  that  this  Connor  Aircraft,  the  one  he 
worked  for,  is  right  next  to  Southern  Air  Transport. 
Presumably,  he's  sitting  there  at  Connor,  looking  down  the 
tarmac  in  Miami  and  watching — 
A     Could  be. 

Q     —  Secord  and  company  taxiing  in  and  out  in 
their  Caribous  and  C-123s. 

If  you  had  asked  him  about  that,  he  would  have 
told  you? 

A     I  don't  know.   I  didn't.   I  had  no  reason  to. 
Basically,  I  had  no  interest  in  talking  to  the 
guy.   I  was  doing  McCormack  a  favor.   The  guy  C2une  over,  and. 






he  said,  "Please  talk  to  him."  And  then  I  talked  to  him. 
That  was  it.   I  didn't  want  to  get  involved  any  more  than  I 
had  to. 

Q     What  did  you  think  of  his  proposal  for  what  he 
calls  "Closely  controlled  DC-6  aircraft  with  a  unique 
delivery  technique,"  and  he  goes  into  enormous  detail  on 
exactly  how  they  are  going  to  do  it,  their  altitude,  their 
drop  methods,  page  after  page  after  page? 

A     I  read  it.   As  far  as  I  was  concerned,  it  was 
nothing  new. 

Q     Is  it  a  competent  idea? 

A     Yes.   It's  a  standard  package. 

Q     Not  entirely  standard? 

A     No.   I  mean,  it's  a  standard  package  for  that  kind 
of  activity.   It's  nothing  new.   Did  it  excite  my 
attention?  Did  it  stretch  my  imagination?  Did  it  teach  me 
any  new  skills  or  techniques?  No.   I  read  it. 

Q     I'm  asking  as  a  guy  who  served  in  Laos  and 
lectured  on  these  techniques,  whether  this  guy  Rehm  is  a 
knowledgeable  guy  with  a  sound  idea ,  or  whether  he ' s  some 
kind  of  fly-by-night  pilot  looking  for  work. 

A     Perfectly  sound,  but  there's  nothing  new. 

CI-nOfMI.  MMWTtn.  INC. 





Q     And  why  didn't  you  let  anybody  in  government  know 
about  this? 

A     I  didn't  have  any  interest.   Didn't  have  any 
desire,  and  as  I  told  you,  my  basic  rule  is  not  to  get 
involved.   I'm  out.   I  did  all  my  time  in  government,  and 
that's  it.   I'm  finished. 

Q     So  you  referred  him  to  Ollie  North? 

A     I  told  him  what  I  read  in  the  newspapers,  and 
that  that  would  be  a  good  place  for  him  to  go. 

Q     Do  you  know  if  he  went? 

A     I  have  no  idea. 

Q     You  never  heard  back  from  North? 

A     I  told  you,  the  only  time  I  talked  to  North  is 
the  one  time  I  saw  him  in  Tom  Rehm's  office. 

Q     So  the  answer  is,  no,  you  didn't. 

A     No,  I  didn't  hear  from  North.   Why  would  I? 

Q     And  you  never  heard  from  Rehm? 

A     I  think  Rehm  called  me  once  or  twice  since  then. 
There  may  be  another  memo  in  there.   Rehm  called  me  in 
July  of  '87. 

Q     That's  page  414  you're  referring  to.   Obviously, 
the  complexion  of  the  covert  operation  in  Nicaragua  changed 

l-nociAL  ncrarrEDS.  inc 






in  the  meantime. 
A     Yes. 

Q     And  he  called  about  something  else;  right? 
A     Right. 

Q     Did  he  ever  tell  you  what,  if  anything,  had 
occurred  with  his  Nicaragua  support  operation  proposal? 
A     No. 

^4R.  MC  KAY:   Off  the  record. 
(Discussion  off  the  record.) 
Q     I'm  looking  at  page  641  and  also  on  page  640  and 
642.   This  is  your  telephone  log  for  RAI ,  and  these  three 
pages  each  have  some  calls  made  on  the  19th,  20th  or  21st 
of  November  '84.   I'd  like  you  to  look  at  these  billings 
and  tell  me,  if  you  can,  what  those  calls  related  to  and  — 
MR.  MC  KAY:   Any  call  on  the  19th  — 
MR.  HOLMES:   19th,  20th  and  21st. 
THE  WITNESS:   I'm  not  sure  I  follow  you.   You're 
asking  rae  to  look  at  the  calls  here. 
Q     We're  talking  about  the  three  days  that  you 
were  in  Europe,  speaking  with  Ghorbanifar. 

E-nSCUl.  •EH)«TEaS.   INC 



A     Right.   So  these  are  the  calls  here. 

Q     Yes .   There  are  a  few  on  that  page  and  a  few 
on  each  succeeding  page.   You're  now  looking  at  64  0. 

A     These  are  calls  —  the  way  this  is  structured, 
these  are  calls  from  my  office  to  these  locations. 

Q     Not  necessarily.   They  would  be  billed  to  your 
office,  whether  made  from  your  office  or  made  from  a 
remote  place. 

A     Usually,  we  say  that  they're  billed,  and  they're 
not.   So  this  looks  to  me  like  these  were  made  from  my 
office  to  these  locations. 

I  mean ,  I  wasn ' t  here . 

Q     Different  carriers  have  different  methods  of 

A     Normally,  my  experience  with  this  is  to  handle 
this  on  a  —  I  don't  handle  the  telephone  bills.   I  know 
how  that  sounds,  but  that's  the  way  it  is.   I  don't  handle 
the  telephone  bills. 

Q     So  you  can't  tell  me  what  those  numbers  are? 

A     X  have  no  idea. 

Q     You  don't  have  any  idea  what  those  numbers  are? 

A     No.   These  are  calls   to  the  U.K.   Here's  a  call 

Ct-fUCML  HratTUS.   INC 





to  France,  a  call  to  Kansas  City,-  Petersburg,  Virginia. 
I  wasn't  here,  so  even  if  i  were  here,  I  probably  wouldn't 
know  what  the  calls  are.   I  don't  monitor  every  call  made 
by  every  person. 

Q     Well,  what  I'd  like  you  to  do  is  place  yourself 
back  in  time  and  tell  me  who  would  be  the  likely  recipient 
of  a  call  from  your  office  during  that  period  of  time  in 
those  cities  and  country. 

I  realize  it's  not  — 
A     None  of  these  jump  out  at  me.   I  have  no  way. 
really  don't  know  what  to  tell  you. 

Q     If  none  of  those,  we  can  go  to  the  next  page  and 
see  if  we  can  find  any  clue  as  to  what  was  going  on. 

A     Well,  there's  one  call  here  I  recognize.   Two 
calls  here.   One  is  to  New  York  to  TW  Oil,  one  is  to 
TW  Oil  in  Holland.   One  is  a  call  to  —  there's  another  call 
~  no,  it's  the  27th.   You  said  the  19th,  20th  and  21st? 
Q     Yes. 

A     There's  a  call  to  TW  Oil  in  Bermuda.   It  sounds 
like  all  standard  business  calls,  whatever  was  going  on  at 
that  particular  time  while  I  wasn't  here. 

Q     You  and  the  people  in  the  office  would  be  in 

■x-natUL  nroKTva.  mc 





touch  with  TW  Oil  on  a  daily  basis? 

A     Right.   But  there's  a  call  here  to  Germany. 
I  don't  know.   Probably  have  to  look  up  the  area  code.   I 
don't  even  know  the  area  code  for  Hamburg. 

Q     What  hotel  did  you  stay  at  in  Hamburg? 

A     I  told  you  the  Four  Seasons.   The  English 
equivalent  of  Four  Seasons.   No,  I  can't  help  you  with  this. 

Q     I'm  showing  you  page  904,  same  question. 

MR.  MC  KAY:   The  earliest  call  here  is  9/26  that 
I  see  on  this  page. 

THE  WITNESS:   That  looks  like  9/30.   I  think  we've 
got  a  disconnect. 


Q     I  gather  from  your  Rolodex,  which  starts  at  page 
1609,  that  you  have  stayed  in  fairly  close  touch  with  the 
House  and  Senate  Intelligence  Committees  over  the  years. 

A  I  think  early  on  in  the  early  days,  I  had  some 
calls,  but  I  haven't  stayed  in  touch  with  them  recently, 
but  their  cards  were  in  the  Rolodex. 

Q     When  you  say  "early  days,"  you  mean  early  after 
your  retirement? 

A     Yes. 




Q     But  you  didn't  see  fit  to  call  them  up  about 
Mr.  Rehm? 

A     No. 

Q     Would  it  have  been  inappropriate  for  you  to  do 
that,  do  you  think? 

A     I  told  you,  I  tried  to  describe  to  you  my  mind 
set.   A  guy  came  in.   I  talked  to  the  man,  told  him  what  he 
could,  and  that  was  it,  as  far  as  I  was  concerned,  and  it 
was  a  closed  chapter.   There's  no  law  that  says  a  guy  walks 
in  your  office,  you  got  ot  report  it  to  somebody. 

Q     Well,  you  knew  that  what  he  was  proposing  would 
have  been  a  violation  of  the  Boland  Amendment? 

MR.  MC  KAY:   I  object.   That  calls  for  a  legal 
conclusion.   There's  no  indication  whatsoever  he  was  thinking 
about  what  the  Boland  Amendment  said. 

THE  WITNESS:   I  wasn't  involved  in  it.   Why  would 
I  worry  eUsout  the  Boland  Amendment? 

Q     Well,  I'm  not  suggesting  you're  sitting  in  your 
office  chewing  your  fingernails  eibout  the  Boland  Amendment. 
As  a  person  who  is  discharged  from  the  CIA  and  living  in 
the  Washington  area  and  cognizant  of  what's  going  on  in 


ci-naoM.  MMNrms.  iw 




covert  operations  around  the  world,  you  had  to  know  the 
Boland  Amendment  existed. 

MR.  MC  KAY:   Are  you  saying  he  is  cognizant  in 
1986  of  what  was  going  on  in  covert  operations  around  the 
world?   I  don't  think  there's  anything  to  justify  that. 

MR.  HOLMES:   Well,  as  a  general  statement,  he 
was  giving  lectures  to  the  military. 

THE  WITNESS:   I'm  talking  about  very  specific 
kinds  of  things  in  terms  of  theory  of  guerrilla  warfare. 

Have  you  read  my  book? 

MR.  HOLMES:   No,  I  haven't.   I'm  willing  to. 

THE  WITNESS:   It's  a  book  on  theory.   It's  a 
theory  of  guerrilla  warfare,  counter insurgency,  as  seen  by 
my  perspective . 

Q     And  you're  not  disagreeing  you  didn't  know  of  the 
Bolsmd  Amendment? 

A     I  may  have  read  something  about  the  Boland 
Amandment,  but  I  wasn't  worrying  about  it.   It  didn't  impact 
on  anything  I  was  doing. 

Q     You  knew  it  existed? 
A     I  knew  it  existed. 

c-moui.  Murnntt.  inc. 





Q     And  you  knew  when  you  read  Rehm's  piece,  that  if 
that  was  implemented  that  would  have  been  a  circumvention 
o   the  Boland  Amendment? 

A     No,  I  don't  think  that  that  thought  even  came  to 
my  mind. 

Q     All  right   If  it  had  come  to  your  mind,  you 
understood  the  Boland  Amendment  enough  to  know  that  that  would 
have  violated  it? 

MR.  MC  KAY:   I'm  going  to  object  to  that  and  say 
it's  speculative  and  direct  him  not  to  answer. 

He  told  you  he  didn't  have  a  thought,  so  what 
difference  what  might  have  cone  to  his  mind,  if  he  had 
thought  eibout  it? 

MR.  HOLMES:   I'm  getting  now  to  what  he 
understood  the  Boland  Amendment  to  mean. 

MR.  MC  KAY:   He  didn't  do  anything.   He  didn't 
deal  with  this  man.   Are  you  saying  he's  got  some  obligation 
to  decide  what  you  all  have  been  spending  months  arguing 
about  what  the  Boland  Amendment  means? 

MR.  HOLMES:   No,  I'm  getting  into  the  facts  of 
what  he  knew. 

MR.  MC  KAY;   Well,  he  knew  the  Boland  Amendment 





existed.   He's  told  you  that. 

THE  WITNESS,:  The  man  caune  in  and  talked  to  me. 
I  talked  with  him.  I  felt  no  compunction  to  do  anything, 

MR.  HOLMES:   I  heard  that. 
THE  WITNESS:   Bang,  finished. 
Q     I  want  to  know  if,  thinking  about  it  now,  in 
retrospect,  you  understood  the  Boland  Amendment  at  that  time 
to  prohibit  what  he  was  suggesting. 
A     I  don ' t  know . 

MR.  MC  KAY:  Object  on  the  grounds  it  calls  for 
a  legal  conclusion,  and  it's  irrelevant. 

THE  WITNESS:   I  don't  know  that  I  did. 
Q     You  say  you  don't  know  whether  you  did  or  not? 
A     Yes. 

Q     Who  is Jeff  Footner  —  F-o-o-t-n-e-r? 
A     Let's  see  if  I  can  refresh  my  — 
Q     He's  with  R.  G.  Hobleman. 

A     He  was  a  guy  who  was  an  account  executive  at 
R.  G.  Hobleman,  the  freight  forwarding  company. 

i-moM.  MPotms.  INC 



Q     How  long  did  you  do  business  with  R.  G.  Hobleman? 

A     For  a  couple  of  years .   I  may  have  used  them 
for  a  while  when  I  was  doing  food  brokerage  business  through 
TGS,  when  I  was  still  trying  to  do  something  in  the  Bahamas. 
I  may  have  used  them  for  a  while  then. 

Q     So,  '79  and  '80,  that  period,  and  then  later 

A     Yes,  certainly  '79  and  '80,  and  then  maybe  at 
some  later  period. 

Q     Are  they  still  in  business? 

A     I  don ' t  know . 

Q     What  was  the  last  you  heard  of  them? 

A     It  seems  to  me,  a  couple  of  years  ago,  but  I 
can't  be  more  precise  than  that. 

Q     And  how  was  it  left?   How  was  your  relationship 
left?   Did  you  simply  get  no  more  business  for  him? 

A     It  was  simply  left  that  we  weren't  doing  that 
boainess,  and  I  had  no  need  for  the  services. 

Q     What  is  Freedom  Oil,  Montgomery,  Alabama? 

A     Freedom  Oil  is  a  company  that  has  gone  out  of 
business.   It's  a  company  that  did  land  leases  in  Louisiana 
and  was  located  in  Montgomgery,  Alabama. 




Q     Is  Dennison  Mines  a  principal  in  that  business? 

A     No.   They  were  doing  work  for  Dennison  Mines, 

Q     And  is  Andy  Nolan  a  principal? 

A     Yes.   Andrew  Nolan  is  a  principal.   He  was  the 
owner  of  that  particular  company,  and  he's  a  cousin  of  my 
wife' s. 

Q     How  do  you  know  Paul  Hewgill? 

A     I  don't  know  that  I  know,  that  I  do  know  him. 

Q     H-e-w-g-i-1-1? 

A     Everybody  in  there  doesn't  necessarily  mean  Z 
know  the  person.   Could  be  somebody  else  in  the  office  had 
put  the  individual  cards  in. 

Q     It  says  he's  senior  vice  president  of  H.M.H. 
Associates  Limited,  International  Security  Consultants,  here 
in  D.C. 

A     That  doesn't  tell  me  anything. 

Q     Do  you  know  Bill  Heron  or  Art  Kim? 

A     Oh,  yes.   Art  Kim.   I  do  know  Art  Kim. 

[who  has  a  security  firm  in  the  Washington 



How  eibout  Bill  Heron? 

Bill  Heron  used  to  work  for  him.   I  don't  know 




whether  he  still  does  or  not. 

Q     Have  any  of  these  men  ever  worked  for  you? 

A     What  do  you  mean,  "worked  for  me"?   When? 

Q     Since  you  retired. 

A     Kim  has  done  some  work  for  me  in  helping  install 
security  systems. 

Q     Install  security  systems? 

A     Yes. 

Q     What  kind  of  security  systems? 

A     Controlled  entry  to  office  complexes. 

Q     I  didn't  know  you  did  that  kind  of  work. 

A     I  told  you  I  did  design  security  systems. 

Q     I  guess  I  didn't  pick  that  up. 
What  kind  of  security  systems? 

A     Because  you  asked  me  if  I  could  design  a  security 
system,  and  I  think  you  jokingly  said  whether  I  designed 
the  security  system  in  North's  house,  and  I  told  you  no. 

Q     You  told  me  you  did  home  renovations,  did  VIP 

A     Right.   And  I  think  I  told  you  also  I  did  security 
systems . 

Q     And  how  long  have  you  done  that? 





A     I  was  doing  that  for  a  number  of  years.   I  don't 
know  when  we  first  started.   I  just  can't  come  up  with 
a  date. 

Q     Has  this  ever  been  in  connection  with  or  in 
cooperation  with  Albert  Hakim? 

A     No,  I  haven't  bought  any  equipment  for  him  or 
done  anything  like  that. 

Q     Have  you  consulted  with  him  eUaout  security 

A     No. 

Q     Do  you  know  Andy  Messing  —  M-e-s-s-i-n-g? 

A     Yes. 

Q     How  do  you  know  him? 

A     I  met  him  here  in  the  Washington  area.   Like  in 
the  days  when  I  knew  him,  he  was  in  the  Conservative 
Caucus . 

Q     Have  you  had  any  business  dealings  with  him? 

A     No. 

Q     What  business,  if  any,  have  you  had  with  a 
Mr.  Raymond  J.  Okudzeto  ~  0-k-u-d-z-e-t-o? 

A     That  sounds  like  a  Nigerian  name.   Let  me  look  at 
that.   That  sounds  like  a  Nigerian  name. 




Q     Page  1662. 

A     I  don't  recall.   That  has  something  to  do  with 
some  company  in  England.   That  has  something  to  do  with  oil, 
but  I  don't  remember  the  details  of  it  at  this  point  in 
time.   It  sounds  like  a  Nigerian  name. 

Q     That's  the  only  time  you  had  dealings  with  this 

A     Well,  I  don't  even  know  that  I  had  dealings. 
Obviously,  somebody  in  my  office  had,  but  that  name  rings 
a  bell,  in  the  context  of  Nigeria. 

Q     Have  we  talked  about  John  Singlaub  before? 

A     I  don't  know.   We  talked  about  so  many  people, 
at  this  point. 

Q     Do  you  know  John  Singlaub? 

A     Yes,  I  do  know  John  Singlaub. 

Q     How  do  you  know  him? 

A     I  first  met  him  in  Laos.   That's  the  only  place 
I  knew  him  from,  and  I  knew  him  in  Vietnam,  and  I  forget. 
I  don't  think  I  have  any  memory  of  dealing  with  Singlaub 
after  Vietnam. 

Q     Have  you  had  any  contact  with  him  at  all  since 






A     Yes.   A  couple  of  times  he  came  into  my  office  to 
discuss  various  things,  and  since  this  famous  law  case  in 
Miami  broke,  I  called  Singlaub  in,  let's  see,  June  of  '86, 
about  the  case. 

Q     Prior  to  that,  what  various  things  have  you 

A     I  think  he  came  in  an  talked  in  general  about  what 
was  happening  in  Asia,  my  appreciation  of  the  Middle  East, 
and  so  forth. 

Q     What  was  his  reason  to  come  and  see  you  about  that? 

A     Just  general  conversation. 

Q     Did  he  have  any  exhortations  for  you? 

A     No.   No  exhortations. 

Q     In  your  discussions  with  him  in  early  1986 ,  what 
did  that  consist  of? 

A     The  sqme  thing  with  everybody  else  I  contacted  in 
June  of  1986:   "What  do  you  know  about  this  Miami  lawsuit, 
and  why  am  I  in  it?" 

Q     And  what  did  he  say? 

A     He  said  he  understand  why  he  was  in  it,  but  he 
didn't  understand  why  I  was  in  it. 





Q     What  did  he  say  about  why  he  was  in  it? 

A     World  Anticoiranunist  League  fund  raising,  so  forth 
and  so  on.   A  very  b^ief  telephone  conversation. 

Q     Did  he  give  you  any  more  details  than  just  that? 

A      No. 

Q     Are  you  friends  with  the  people  at  R.  G.  Hobleman? 
I  notice  you've  got  five  or  six  different  R.  G.  Hcbleman 
em-ployees  listed  out  separately. 

A     No.   I  think  at  various  and  sundry  times,  their 
people  changes,  and  we  had  just  different  cards  with  different 

The  only  people  that  I  can  remember  meeting  is 

Q     So  these  would  have  been  cards  for  the  use  of 
your  office  staff  in  making  commercial  connections  back  and 
forth  over  the  time  you  were  there? 

A     Right. 

Q     Have  you  been  in  touch  wit} 
—  since  you  retired? 

A     Yes. 

Q     You  have  both' 
separately.   You  hav 

and^^^^^^^HLn  here 

and  you  have  spelled 



/hich  is  one  of  a  number  of  optional 
spellings . 

A     Yes. 

Q     With  the  saune  phone  number.   I  gather  that  you 
have  had  contact  with  him  yourself? 

A     Yes.   I  told  you  I  met  him. 

Q     And  what  was  the  context  of  that? 

A     We  covered  this  the  other  day. 

Q     You  had  personal  contact  with  him,  or  are  you 
talking  about  Hakim? 

A     We  covered  all  of  that.   Just  to  refresh  your 
memory,  put  out  an  English  language  training  program  for 
him,  so  I  had  dealings  with  him  at  that  time. 

Q     You  haven't  had  dealings  with  him  other  than  the 
ones  you  talked  a^ut  the  last  time  we  were  here? 

A     Right. 

Q     There's  a  Jim  Fees  in  here. 

have  seen  him  several  times 

in  social  context. 





Q     No  business  dealings? 

A     No. 

MR.  MC  KAY:  Off  the  record. 
(Discussion  off  the  record.) 

Q      I  asked  you.  abou^^^^^^^Bbut  I  didn't  ask  you 
if  you  had  any  business  dealings  with  them  since  you  retired, 

A     No,  I  didn.'t  have  any  business  dealings  with  them. 

Q     What  is  RPV? 

A     That's  reconnaissance  airplane  type  thing,  little 
drones.   1  think  it's  reconnaissance  photo  vehicle. 

Q     And  what  did  you  and  Felix  Rodriguez  have  in 
conunon  with  RPVs  in  1982,  looking  at  page  1895? 

For  the  record,  I  might  note  we  are  in  the  TGS 

A     This  is  a  letter  written  by  a  fellow  who  was 
associated  with  me  at  the  time,  Johnny  Carter,  to  a  company 
in  Panama  that  obviously  was  looking  for  RPVs,  and  this  was 
an  attempt  to  open  a  dialogue.   This  probably  was  some 
company  that  was  recommended  by  Felix. 

Q     The  Paneuna  Comp2uiy? 

A     No.   It  looks  like  it's  in  Caracus.   I  think  if 




you  look  at  it,  it  shows  it's  Caracus. 

Q     What  did  FeJix  Rodriguez  have  to  do  with  it? 
That's  my  question. 

A     I  don't  know.   This  was  obviously  a  transaction 
that  one  of  the  fellows,  at  that  time,  John  Carter,  handled 
with  Felix.   And  it  looks  like  we  were  trying  to  market 
an  RPV.   This  is  probably  some  company  that  Felix  said, 
these  guys  are  interested  in  RPVs. 

Q     Were  were  you  getting  the  RPVs  to  market? 

A     Let's  see  if  it  says  in  here.   I  don't  recall.   It 
says  about  a  brochure.   Let  me  see  if  there  is  anything  in 
here.   I  don't  see  it.   It  just  says,  "I'm  enclosing 
brochures  and  flyers  on  the  system." 

I  don ft  know  what  company  we  were  getting  them 

Q     Are  there  a  number  of  RPV  companies? 

A  Yes.      It's  a  fairly  conunon  — 

Q     What  is  Project  Long  Look? 

A     For  me,  it  looks  like  that's  a  description  of 
whoever 's  brochure  it  was,  they  were  describing  this 

Q     And  it  says  they  are  being  bought  by  any  of  the 





South  American  countries. 

A     Yes. 

Q     What  does  it  do  exactly?   It  flies  around  in 
circles  and  — 

A     No,  It  can  v6  used  as  a  reconnaissance  vehicle. 
In  other  words,  if  you  want  to  put  it  —  it's  like  a  drone. 

Q     I'm  not  getting  the  whole  picture  of  what  kind  of 
things  you  would  use  it  for.    Is  it  high  altitude,  low 

A     No,  this  is  essentially  low  altitude. 

Q     Elestronically  radio-controlled? 

A     Essentially,  ground  control,  so  that  you  can 
fly  one  of  these  reconnaissance  vehicles  and  take  photographs 
of  a  particular  area.   You  might  use  it  for  geological 
surveys  in  inaccessible  areas.   That's  its  commercial 
civilian  utilization.   It  also,  obviously,  has  a  defense- 
related  utilization. 

Q     What  are  the  ranges? 

A     They  vary.   I  mean,  the  systems  vary.   You're 
talking  short  ranges,  50-75  miles. 

Q     And  you  paid  Felix  Rodriguez  for  some  travel  in 
connection  with,  I  gather? 





A     Right . 

Q     None  of  this  was  ever  sold? 

A     No. 

Q     Did  you  ever  discuss  RFVs  with  anybody  who  was 
intending  to  support  the  Nicaraguan  opposition? 

A     When  your  lawyer  contacted  me  about  this 
disclosure,  we  discussed  a  Kuwaiti  project.   I  gather  in 
this  financial  document  section,  I  see  some  references 
to  a  Navy  claim  for  $3-1/3  million,  and  it  seems  to  be 
in  connection  with  work  contracted  to  be  done  in  Kuwait. 

A     That's  correct. 

Q     Can  you  give  me  a  thumbnail  sketch  of  the  Kuwaiti 
project||  so  we'll  have  that? 

A     I  think  that's  a  write-up  in  the  file  there. 
The  last  project  we  did  was  to  refurbish  a 
warehouse  and  build  a  new  warehouse  and  an  administrative 
building.   That's  the  proejct  on  which  there's  a  claim  for 
funds  in  excess  of  $3  million. 

Q     Did  your  line  of  credit  with  the  Capitol  Bank 
have  anything  to  do  with  the  Kuwaiti  project? 

A     Yes. 

Q     And  was  the  Kuwaiti  project  the  purpose  of  the 




$1  million  in  documentary  letters  of  credit  for  material 

A      Yes. 

Q     So  this  was  also  construction  materials? 

A     Right.   Construction  materials  or  prefabricated 
warehousing  components. 

Q     In  your  dealings  with  Mr.  Singlaub,  you  had 
occasion  to  deal  with  his  company,  GEOMILITECH? 

A     Not  in  my  dealings  with  him.   Separate  from  that, 
i  can't  think  of  the  lady's  name,  but  if  you  show  me  the 
file,  I'll  tell  you  the  lady's  name. 

Q     Barbara  Studley? 

A     That's  right.   She  came  into  our  office  with 
Andy  Messing  and  said  she  was  interested  in  risk  analysis 
business.   She  was  interested  in  the  defense  market  in  Latin 
America,  so  forth,  and  we  talked  with  her,  Andy  Messing  and 
her  lawyer,  whoever  he  was.   I  don't  remember  the  man's 
name.   And  then  she  gave  us  a  brochure,  or  we  got  a 
brochure  subsequently,  which  mentioned  Singlaub  as  being 
one  of  the  people  in  that  company. 

Q     And  the  people  that  are  described  in  their 
literature  are  former  Air  Force  and  special  operations 





types,  for  the  most  part;  is  that  correct? 

A  I  haven't  looked  at  that  for  a  long  time,  other  than 
Singlaub.    If  you  let  me  look  at  it,  maybe  I  can  — 

Q     There's  a  Bruce  Herbert,  who  is  Intratheater 
Air  Lift  to  Support  the  Kuwaiti  Forces;  there's  Ron  Harold, 
who  is  a  former  Israeli  Air  Force;  there's  Singlaub  himself, 
who  is  former  Joint  Unconventional  Warfare  Task  Group. 

A     Of  the  names  you  read  there,  the  only  neune  I  know 
of  is  Singlaub. 

Q     Did  you  or  any  of  your  companies  associated  with 
you  ever  do  business  with  GEOMILITECH? 
A     No. 

Q     Back  in  November  of  '84,  according  to  page  1903, 
in  the  disclosure  you  wrote  another  one  of  your  self- 
protective  memorztnda  for  the  record  relating  to  a  contact 
with  the  GEOMILITECH  consultants.   I'll  just  read  it  in  the 
record;  since  it's  very  short. 

"Mr.  Rafael  Garcia-Toledo  visited  the  TGS 
International  office  on  16  November.  He 
was  acccoipanied  by  Mr.  Munez.  The  people 
in  GEOMILITECH  that  were  known  to  us  were 
discussed,  i.e.,  Barbara  Studley, 





Major  General  Keegan,  Major  General 
Singlaub  and  John  Carbugh.   This  led 
to  a  discussion  of  the  arms  market 
and  general  trends  in  this  arena." 
I'd  like  to  know  what  discussion  you  had  with 
those  folks  on  that  subject. 

MR.  MC  KAY:   I'm  going  to  object  to  the  question. 
I  don't  know  what  you  mean  by  "self-protective  memoranda." 
He  writes  memoranda  for  the  record  of  visits  to  make   a 

MR.  HOLMES:   I  don't  mean  it  in  a  derogatory 
sense.   I  write  self-protective  menoranda  to  the  file  too. 
I  think  it's  a  good  practice.   I'm  just  asking  him  to 
expand  on  this. 

MR.  MC  KAY:   All  right. 

THE  WITNESS:   When  you  read  those  names,  you 
didn't  read  Keegan 's  name.   Is  he  in  the  original  list? 
MR.  HOLMES:   Well,  Keegan  is  on  your  list? 
THE  WITNESS:   Is  he  in  the  list?  You  read  a 
couple  of  names, and  I  don't  remember  you  reading  Keegan. 

MR.  HOLMES:   No,  I  didn't  read  it.   It's  not 
in  there. 





THE  WITNESS:   I  just  want  to  make  sure  we  didn't 
cross  there,  because  I  do  know  Keegan. 

Rafael  Garcia-Toledo  has  been  active  in  the 
Latin  American  market  for  a  long  period  of  time,  essentially, 
in  the  housing  area.   I  think  he  was  looking,  in  terms  of 
expanding  his  business  into  what  he  thought  was  a  lucrative 
market  in  Latin  America  for  arms.   He  ceune  to  us  to  talk 
about  GEOMILITECH,  raised  these  names  with  us,  and  we  gave 
him  our  evaluation  of  what  we  knew  of  these  people. 

Q     Was  he  contemplating  some  kind  of  joint  venture? 

A     I  don't  know.  He  had  met  these  people  recently 
and  wanted  to  know  who  they  were,  and  I  don't  know  what 
the  interrelationship  was,  you  know,  what  they  were  going  to 
do,  and  we  talked  about  the  trends  in  Latin  America,  who 
had  money,  who  didn't  have  money,  who  was  likely  to  have 
money  in  the  future,  and  so  forth,  and  I  think  my  advice 
to  him  was  to  say  out  of  the  arms  market. 

Q     Were  you  able  to  tell  him  from  any  source  you 
now  recall  what  the  financial  picture  was  for  arms  in 
Central  America? 

A     No.   But  there  are  a  lot  of  overt  publications 
that  are  around,  and  we  get  those  publications,  so  we  keep 




abreast  of  the  trends  and  developments  in  this  area. 

Q     And  there ' s  another  cryptic  sentence  here  on  page 
1904,  which  is  from  GEOMILITECH  documents. 
A     Is  it  a  brochure  or  something? 

Q     I  don't  know  if  you  call  it  a  brochure,  but  it's 
some  stuff  that's  got  their  letterhead  at  the  bottom.   It 

"GMT  corporate  strategy  rests  upon 
the  jJaility  for  a  strong  national 
defense,  perpetuates  a  healthy 
economy  and,  therefore,  the  potential 
for  world  peace." 
Have  you  ever  discussed  this  belief  with  anybody 
A     No. 

Q     As  a  person  who  has  spent  his  career  in  government 
operations  that  have  some  connection  with  national  defense, 
what  is  your  opinion  about  that  statement? 

MR.  MC  KAY:  I'm  going  to  object  on  the  basis, 
it's  irrelevant,  but  you  can  answer  the  question,  if  you 

THE  WITNESS:   I  don't  think  I  really  focused  on 





(6:00  p.m.) 
it.   I  didn't  pay  any  attention  to  it,  and  at  this  point  in 
today's  session,  I'.n  getting  tired,  and  you  know,  we're 
running  down.   I  don't  have  any  views  on  that. 

Q     Now  I  gather  there  was  a  period  of  time  since 
your  retirement  —  or  maybe  it's  a  longer  period  of  time  — 
in  which  you  solicited  information  in  preparation  for 
bids  relating  to  weapons  systems  from  the  U.S.  government? 

A     Related?  That  is,  the  support  aspect  of  weapons? 

Q     Right. 

A     A  lot  of  times  what  you  see  is  in  the  "Commerce 
Daily  Business,"  a  two-or- three- line  thing  saying,  if  you're 
interested  —  you  don't  even  know  from  the  description 
whether  you're  interested  or  what  the  system  is.   You  sort 
of  have  to  go  on  a  few  key  words. 

So  we  did  write  a  number  of  proposals  to  see  if 
it  was  something  we  wanted  to  bid  on. 

Q     Some  of  these  have  included  missile  systems, 
haven't  they? 

A     I'd  have  to  look  at  that  array  of  paper  there . 

Q     I'm  looking  at  page  1916,  where  you're  asking 
through  Bill  Howe,  your  vice  president,  for  information 





pertaining  to  technical  services  in  support  of  a  ground 
launched  CRUISE  missile  project.   And  there's  another  one 
relating  to  HAWK  missiles. 

A     We  would  be  looking  at  that  in  terms  of  the 
storage  aspect  of  spare  parts  and  backup  for  these  particular 

Q     And  did  you  ever  do  any  contracts? 

A     No. 

Q     You  were  prepared  to  do  contracts,  if  you  had  any? 

A     We  were  prepared  to  look  at  them  to  see  if  that 
was  within  our  capability. 

Q     Does  Harper  Robinson  &  Company  have  any  ties  with 
R.  G.  Hobleman  &  Company? 

A     No. 

Q     Does  it  have  any  crossover  in  employees  or 
offices  or  facilities  at  all  that  you  are  aware  of? 

A     No.   No.   Harper  Robinson  was  a  designated 
freight  coordinator  for  the  Kuwaiti  government,  and  that's 
why  we  dealt  with  them  on  the  Kuwait  project.   An 
idependent  company. 

Q     Looking  at  document  1935,  in  which  you  are 
responding  to  a  Jorge  Poveda  —  P-o-v-e-d-a  —  in  Costa 





Rica  and  say  at  the  bottom: 

"Re  lobbying  for  a  Peronista  group,  would 
need  more  details  before  being  able  to 
express  serious  interest.   Some  Peronista 
factions  clearly  all  right.   Some  not." 
Excuse  me.   That's  Jcimie  who  said  that. 
A     I  was  going  to  say  that  sounds  like  a  Jamie 
cable,  because  he  has,  on  several  occasions,  looked  at 
representing  foreign  governments  in  the  United  States. 
I  don't  subscribe  to  doing  that,  and  therefore,  if  he 
had  ever  got  a  contract  to  do  that,  he  would  have  gone  off 
on  his  own. 

Q     Do  you  know  what  he  means  by  this  —  what 
Peronists  he  thinks  are  all  right  and  which  ones  he  doesn't? 
A     I  haven't  discussed  that  with  him. 
Q     Have  you  ever  done  any  business  with  this 
Jorge'  Poveda? 

A     No,  I  have  not. 

Q     When  I  say  "you,"  I  naturally  mean  you  and  the 
ccnipany . 

A     No,  we  have  not  done  any  business  with  them. 
I  think  that  was  a  contact  of  Jamie's.   Jamie  was  exploring 





something  with  them,  and  that  was  it.   Nothing  came  of  it, 
as  far  -as  I  know. 

Q     Have  you  discussed  with  anyone  the  possibility 
of  lobbying  on  behalf  of  greater  foreign  aid  for  a  Central 
American  country? 

A     No.   I  think  Jamie  was  looking  at  one  time  as  to 
represent  somebody  in  Guatemala  or  somebody,  and  he  was 
trying  to  put  a  group  together  and  had  some  discussions.   I 
never  discouraged  him  from  doing  it,  but  the  understanding 
was,  if  he  ever  put  a  package  together,  that  he  was  off 
on  his  own. 

Q     This  is  dated  February  1983,  and  he  states  in  the 
letter  cable  to  Francisco  Bianchi  —  B-i-a-n-c-h-i: 
"Must  stress  that  good  lobbying  efforts 
here,  in  all  probability,  would  add 
millions  of  dollars  to  Guatemala's 
aid  package  and  significantly  increase 
opportunities  to  export  to  U.S." 
Does  that  sound  like  an  offer  to  lobby  for 

A     I  think  he  probably  was  interested  in  looking  at 
that.   I  recall  he  talked  with  two  or  three  people  to  see 





if  they  could  put  something  together. 

Q  Do  you  knovv  if  Donald  Jameson  has  ever  registered 
as  a  foreign  agent  or  agent  of  a  foreign  government? 

A     I  don't  think  he's  ever  represented  a  foreign 
government.   I  think  he  tried  on  several  occasions  to  put 
a  package  together  and  has  not  been  successful  in  doing  so. 

Q     Hassan  Managa  is  an  employee  of  TGS,  isn't  he? 

A     He  was  an  associate.   His  father  is  a  shareholder 
in  TGS .   He  did  some  architectural  work  for  us  on  the 
Kuwait  project. 

Q     I'm  looking  at  document  1021.   It's  2011.   He's 
talking  about  a  barter  deal  with  Iran. 

A     Yes. 

Q     And  he  says,  "Say  hello  to  Ali  for  me." 
Who  is  Ali? 

A     I  have  no  idea. 

Q     Would  it  help  you  to  look  at  the  thing?   It's 
dated  September  of  '85,  if  you  can  narrow  down  the  "All's." 

A     No,  I  can't. 

Q  During  the  1985- '86  period  did  your  company,  TGS, 
have  something  to  do  with  looking  for  specialized  security- 
type  people  to  work  in  Saudi  Arabia? 

y:1bLnOil?i « 




A     Specialized  security  people?   Better  let  me  take 
a  look  at  that. 

Q     2033. 

A     Let  me  take  a  look  at  that. 

Q     Specialized  U.S.  and  British  workers  for 
eiTiployroent  in  Saudi  Arabia. 

In  other  words,  workers  to  be  security  type 
people . 

Are  those  construction  people,  or  what? 

A     Just  let  me  plow  through  this ,  because  that 
doesn't  tell  me  anything.   This  was  a  transaction  handled 
by  Mr.  Gillespie.   1  don't  see  anything  here  that  would  help 
me  answer  that  question.   It  doesn't  ring  any  bells  with 
me.   I  would  say  they  odds  are  that  some  sort  of  construction 

Q     Why  would  you  look  for  British  people  to  do 
construction  work? 

A     Depending  on  what  the  items  were.   In  some  cases, 
the  British  engineers  are  cheaper  than  American  engineers. 

Q     I'm  looking  now  at  a  foldeJ[^ marked  Stanford 
Technology.   It  starts  on  page  2081,  and  at  2084,  there's  a 
letter  from  yourself  to  Hakim  relating  to  helicopter 





sales  in  South  Korea.   These  are  the  Hughes  helicopters  we 
talked  about  before? 

A     Yes. 

Q     What  was  Hakim's  part  in  this  transaction?  What 
was  he  bringing  to  it? 

A     Basically,  the  entry  into  the  Korean  market.   He 
had  neen  doing  some  work,  I  think,  by  that  time,  in  Korea. 

Q     Who  were  his  contacts  there? 

A     I  don't  know.   I  know  he  had  done  some  work  for 
the  Korean  Power  Company  or  Electric  Power  Company  and  had 
a  lot  of  contacts  with  the  Korean  business  community.   If 
I  recall  that  correctly,  we  were  recommending  to  him  to  look 
at  the  Korean  Airlines  import  of  helicopters  or  assembly  of 

Q     These  are  military  helicopters;  right? 

A     No. 

Q     Model  500MD  Defender  Scout  sounds  like  a  military 

A     No.   I  think  that  was  an  assembly.   But  I  would 
have  to  look  at  the  catalog.   I  think  this  was  an  assembly 
project  of  a  fairly  light  helicopter.   I  think  it's  a 
commercial  helicopter.   Otherwise,  I  don't  know  why  Korean 





Airlines  would  be  putting  them  together. 

Q     I'd  like  you  to  look  at  page  2085.   This  is  an 
early  1983  termination  of  the  Trinidad  and  Tobago  project 
and  the  Honduras  project. 

I  want  you  to  tell  me  what  the  Honduras  project 
was  at  that  point. 

A     It  looks  like  someone  in  Honduras  had  some  sort  of 
a  radar  program  that  we  had  been  asked  to  look  at  or  we 
had  proposed. 

I  don't  recall  the  details  of  it.   Looking  at  these 
two  numbers,  they  both  look  to  be  in  the  same  category,  so 
I  know  that  the  Trinidad-Tobago  one  was  a  radar,  so  I 
assume  this  is  a  radar. 

Q     You  don't  recall  anything  more  about  the  Honduras 
project  other  than  radar? 

A     No,  I  don't. 

Q     Has  it  the  sazae   kind  of  shore  type  or  shore  coast 
radar  as  Trinidad  and  Tobago? 

A     No,  I  really  can't  recall.   Obviously,  it  says 
here,  specifically,   Hestinghouse  is  coming  up  with  a  project, 
so  they  make  a  wide  array  of  stuff,  so  I  don't  know  what  that 
could  be.   Right  here  it  says  in  here  there's  a  description  i 





of  this. 

Q      2086? 

A     Air  Transport  Long  Range  Search  Radar. 

Q     What  is  that? 

A     This  is  possibly  some  sort  of  a  radar  system  that 
can  be  put  into  a  van  and  can  be  moved  from  one  location  to 
another  to  give  the  radar  facility  mobility  against  whatever 
target  it's  looking  at,  not  tied  to  a  fixed  base. 

Q     What  is  the  application  for  a  system  like  that? 

A     Probably  coastal  and  air  defense. 

Q     Against  what? 

A     Airplanes,  ships.   You  know,  whatever  you're 
targeting  against. 

Q     And  what  was  Honduras  concerned  eibout  at  that 

A     That  I  can't  tell  you.   I  don't  have  any  — 

Q     Other  than  Dick  Secord? 

A     In  1983?   You  know,  there  was  a  time  —  I  can't 
clarify  that  any  further  than  that.   I'm  just  trying  to 
think  what  was  going  on  in  ' 83 . 

Q     Was  this  intended  for  use  in  Honduras? 

A     That's  certainly  the  impression  I  get  from  that. 





I  don't  remember  that  transaction. 

Q     And  you  don't  recall  discussing  this  with  Neidhart 
or  anybody  else? 

A     No. 

Q     Is  it  possible  that  that  system  was  meant  to  be 
purchased  by  Honduras  and  turned  over  to  somebody  else  like 
the  contras  for  use? 

MR.  MC  KAY:   I  object.   I  think  that  calls  for 

THE  WITNESS:   You  know,  in  '83,  I  have  no  concept 
of  that. 

Q     I  gather,  from  page  2091,  that  you  and  Mr.  Hakim, 
as  early  as  August  of  1982,  you  and  TGS  were  engaged  in 
discussions  about  support  systems  for  a  number  of  military 
weapons  in  Egypt,  including  armored  vehicles,  HAWK  missiles, 
F-16  Falcons  and  P-4  Phantoms;  is  that  accurate? 

A     Yes,  I  think  we  mentioned  before,  we  had  given 
tiMB  a  series  of  packages  relative  to  logistics  systems 
for  various  tactical  components. 

MR.  MC  KAY:   Explain  for  the  record  what  you 
proposing  to  provide. 




THE  WITNESS:  Part  of  the  storage  equipment  which 
would  enhance  the  retrieval  and  issuance  of  spare  parts  for 
systems . 


Q     Have  you  ever  heard  of  a  company  called  Four  Ways? 

A     No.   I  think  you  asked  me  this  before.   I'm  not 
familiar  with  a  company.  Four  Ways,  but  I  think  you  asked  me 
this  before.   It's  come  up  somewhere  here  recently. 

Q     It  might  have  been  in  the  subpoena. 

Are  you  fcuniliar  with  any  company  by  any  name 
that  manufactures  difficult-t<3- locate,  out-of-production 
military  spare  parts? 

A      No. 

Q     You  have  never  done  business  with  any  company  like 

A     That  manufactures  difficult  spare  parts? 

Q     Right.   Spare  parts  that  are  either  out  of 
production  or  a  particular  need  for  one  reason  or  another , 

A     No,  I  don't  have  any  recollection  of  being  in 
touch  with  that  kind  of  a  company. 

Q     Have  you  ever  discussed  that  kind  of  company 
with  Hakim  or  Secord  or  Clines? 





A     No,  not  that  I  have  any  memory  of. 
Q     Various  of  these  proposals  that  you  put  together 
I  notice  are  a  sizable  amount  of  money,  are  they  not? 

A     Yes.   Some  of  the  spare  part  systems  to  handle 
that  kind  of  item  are  expensive. 

Q     So  it  would  be  fair  to  say  that  if  you  and  Hakim 
had  been  successful  in  any  of  these,  that  it  would  have 
made  an  enormous  difference  to  your  company's  financial 

A     Yes. 

Q     Like  this  HAWK  parts  logistic  support  system  is 
$5  million  and  some  of  these  others  are  larger? 

A     Right. 

Q     Has  TGS  engaged  in  the  sale  of  medical  supplies 
in  the  Middle  East? 

A     We  are  trying  to  get  involved  in  the  sale  of 
medical  supplies  in  the  Middle  East. 

Q     When  did  this  effort  begin  at  TGS? 

A     Probaibly  in  a  serious  way,  1  guess  maybe  about 
a  year  ago. 

Q     In  other  words,  December  of  '86? 

A     Well,  it  seems  to  me  about  a  year  ago  we  were 




talking.   Prior  to  that,  we  had  some  correspondence  with 
Kuwait  and  so  forth  on  individual  medical  items,  but  I 
think  in  a  serious  vein  in  Kuwait  about  a  year  ago. 

Q     And  the  source  of  these  medical  supplies  would 
have  been  where? 

A     U.S.  firms. 

Q     Strictly  U.S.? 

A     Yes. 

Q     Not  European? 

A     No,  we  have  not  looked  in  the  European  market. 

Q     Have  you  discussed  supply  of  medical  supplies  to 
any  Middle  Eastern  country  with  Hakim? 

A      No. 

Q     Secord? 

A     No,  I  have  no  recollection  of  that. 

Q  Has  TGS,  through  its  board  of  directors,  discussed 
the  possibility  of  providing  or  purchasing,  for  any  purpose, 
jet  aircraft? 

A     We  have  talked  about  747s.   I  think  I  covered 
this  with  you  the  other  day,  about  747s  for  China.   747s, 

and  I  think,  707s.   You're  probeibly  reading  from  the 

corporate  minutes  there. 





Q     I'm  reading  this  from  document  2962.   But  the 
reference  is  to  a  Fernando  Povone. 

What  role  did  he  have  in  this  transaction? 

A     He  is  an  Italian,  and  he  was  representing  the 
Italian  company  that  was  interested  in  putting  together  a 
transportation  deal  with  China. 

You  remember  I  explained  to  you  that  they  were 
looking  at  various  configurations  of  airplanes:   total 
freight,  half  freight,  half  passenger,  all  passenger,  which 
made  it  very  difficult  to  put  together  what  they  wanted. 

Q     What  is  the  market  price  for  a  747  aircraft? 

A      It  depends.   I  can't  give  you  a  cold  answer  like 

Q     Sure,  I  understand  that.   Give  me  a  range. 

A     I  mean,  there  are  so  many  variables,  and  you 
can't  back  me  into  an  answer,  because  you  want  an  answer. 

Q     I  don't  want  a  specific  answer.   I  want  to  know 
what  kind  of  money  we're  talking  about.   Would  it  be  a 
couple  of  million? 

A     You're  talking  about  a  substantial  amount  of 
money.   It  depends  on  how  many  hours  are  on  the  air  frame, 
how  many  hours  on  each  engine,  what  spare  parts  package 





goes  with  it,  and  so  forth,  and  each  one  has  to  be  looked 
at  in  the  context  of  the  time. 

Q     Let's  get  into  it  a  little  bit  further.   You 
had  potential  buyers  in  China;  correct? 

A     Mr.  Povone  had  potential  buyers  in  China. 

Q     And  they  had  at  least  some,  idea  of  their  needs? 

A     Right. 

Q     And  they  communicated  those  needs  to  you? 

A     No.   To  Mr .  Povone. 

Q     And  at  some  point  in  time,  you  and  Mr.  Povone 
attached  some  specific  group  of  aircraft  to  their  needs? 

A     Well,  we  were  looking  at  and  negotiating  at  that 
time,  I  think,  with  TWA. 

Q     And  negotiations  with  TWA  were  for  particular 

A     Right.   For  a  specific  type  of  aircraft  and 
configuration.   But  the  Chinese  couldn't  define  exactly 
what  they  wanted;  TWA  had  no  schedule  for  releasing  the 
aircraft,  and  eventually,  the  thing  just  disappeared. 

Q     Now  I  want  to  know  what  the  price  ranges  were  of 
the  particular  aircraft  that^you  and  TWA  were  discussing. 

A     I  don't  recall.   If  it's  in  there,  let  me  read 

4^£«:i  «A(#'lJr5i  tS»t«* 



the  thing. 

Q     It's  not  in  here. 

A     I  really  don't  recall.   It's  that  complicated  a 
kind  of  transaction,  you  just  can't  come  out  with  a  number. 

Q     Did  you  and  TGS  discuss  the  purchase  of  any  other 
jet  aircraft? 

A     In  what  time  frame? 

Q     Any  time  frame? 

A     I  think  jet  aircraft  —  no,  I  don't  recall  any 
jet  aircraft. 

Q     Does  that  mean  that  you  recall  nonjet  aircraft? 

A     We  talked  the  other  day  about  the  Buffalo- 
DeHaviland's  airplane.   That's  not  a  jet  airplane.   That's 
a  reciprocal  engine. 

Q     Have  you  discussed  with  Hakim  the  proposal 
purchase  of  aircraft  at  any  time? 

A  I  have  no  memory  of  talking  to  Hakim,  other  than 
what  we  talked  about  when  we  talked  about  helicopter  spare 
parts,  and  so  forth,  and  no  other  aircraft  that  I  can  recall 

Q     In  the  1985  time  frama,  was  TGS  interested  in 
becoming  a  food  broker  for  Iran? 

A     Well,  we  looked  at  that  proposal  that  Managa  had 





raised.   You  showed  me  some  correspondence,  we  were  talking 
about  before. 

There  was  a  proposal  to  sell  food  products  to 
Iran,  but  we  found  it  couldn't  be  done. 

Q     And  these  were  food  products  that  were  going  to 
be  brokered  through  the  Bahamas? 

A     Right. 

Q     Tell  me  how  that  was  going  to  work  in  a  business 

A     Well,  there's  a  lot  of  food  imported  from  the 
United  States  into  the  Bahamas. 

The  question  was,  could  you  put  a  label  on  it,  so 
that  you  had  American  food  products  but  not  showing  that  it 
came  from  the  United  States,  and  the  answer  is,  no,  you 
can't,  or  could  you  put  a  Bahamian  label  on  it?  You  can't? 

Q     And  then  transship  it  to  Iran? 

A     Ship  it  to  Iran.   There's  no  way  you  can  do  that. 

Q     You  can  buyers  in  Iran  for  the  food,  if  it  was 

A     The  Iranians  had  contacted  Hassan  Managa  and  said 
they  were  interested  in  large  purchases  of  food,  U.S.  type 
products,  but  not  U.S. -labeled.   So  the  question  is,  can 

^  i»-2:,nU 




you  relabel?   Is  there  a  way  to  do  that?   And  the  short 
answer  to  it  is  no. 

Q      Which  I  take  it,  took  a  while  to  figure  out? 

A      Right. 

Q      During  what  period  of  time  was  that  opportunity 
being  discussed? 

I'm  looking  at  2980,  which  is  your  board  of 
directors  meeting  for  20  May  '85. 

A     That  sounds  right.   And  you've  got  some  other 
traffic  there,  which  was  a  telex  exchange  between  Hassan 
Managa  and  somebody  in  Iran. 

Q      Did  TGS  explore  any  alternative  routeeof  supplying 
food  to  Iran? 

A     No. 

Q     And  have  they  ever  supplied  food  to  Iran? 

A     No. 

Q      Looking  at  2980  still,  I  would  like  you  to  tell 
me,  in  paragraph  4,  what  K-4  means,  and  what  —  well,  just 
tail  me  what  K-4  means  first. 

A     Well,  K-4  is  a  warehouse  complex  in  Kuwait. 

Q      And  the  C-130,  DC-9  warehouse  is  another  complex? 

A      Another  project;  yes. 





Q     Is  it  in  Kuwait? 
A     Yes. 

Q     Has  TGS  ever  done  any  business  with  Libya  at  all? 
A     No. 

Q     Has  it  ever  done  any  business  in  C-130  parts  or 

A     No.   This  is  a  warehouse  for  spare  parts  which 
were  already  there  in  Kuwait. 

Q     Kuwait  was  supplying  the  spare  parts? 
A     Kuwait  had  the  spare  parts  already.   It  was  a 
matter  of  creating  a  warehouse,  so  they  could  recover  their 

MR.  HOLMES:   Any  questions? 

MR.  MONSKY:   Have  you  covered  Mr.  Zucker? 

MR.  HOLMES:   No. 

Q     Have  you  heard  of  a  Willard  Zucker? 
A     Yes,  I  have  heard  of  Willard  Zucker. 
Q     What  do  you  know  about  him? 
A     Basically,  that  he  is  a  tax  man,  lives  in 
Geneva,  Switzerland,  and  has  been  a  longtime  associate 





of  Mr.    Hakim. 

Q     Have  you  ever  met  him? 

A     Yes,  I  met  him  once  and  possibly  twice. 

Q     Could  you  tell  me  when  that  was? 

A     I  met  him  once  in  the  United  States,  but  I  can't 
remember  the  year.   It  was  probably  sometime  in  the  '80s, 
but  I  don't  know  what  year  it  was. 

Q     And  what  was  the  context? 

A     The  context  is,  I  was  meeting  Hakim  and  Hakim 
was  finishing  a  meeting  with  Mr.  Zucker,  and  Mr.  Zucker 
was  going  to  the  airport,  and  I  was  introduced  to  him.   He 
took  off,  and  that  was  about  the  extent  of  it. 

Q     And  where  was  the  meeting? 

A     I  don't  recall.   I  think  it  was  in  the  hotel 
somewhere,  in  a  downtown  hotel,  but  I  don't  have  any 
recollection  of  that,  except  I  met  him.   I  was  introduced 
to  him,  and  that  was  it. 

Q     What  was  the  nature  of  the  transaction  that  you 
were  conducting  with  Mr.  Hakim? 

A     I  think  it  was  just  a  periodic  meeting  with 
him  that  I  was  going  to.   I  donit  want  to  go  back,  you 
know,  this  late  in  the  day.   I'm  tired,  and  I  have  been  at 



now  for  a  while.   I  had  a  series  of  discussions  with 
Mr.  Hakim.   I  met  with  him  periodically.  I  can't  be  any 
more  precise  than  that  to  you. 

Q     You  said  two  meetings? 

A     I  met  Mr.  Zucker  once  just  to  say  hello  and  talk 
to  him  in  the  Geneva  airport  when  I  was  transiting  Geneva 
airport  with  Mr.  Hakim  on  a  trip. 

MR.  MONSKY:   Off  the  record. 
(Discussion  off  the  record.) 
MK.  MONSKY:   Let's  go  back  on. 

Q     Can  you  tell  me  what  that  trip  involved? 

A     I  think  Mr.  Hakim  and  I  were  on  a  trip  to  — 
either  coming  back  from  Egypt  or  going  to  Egypt. 

Q     And  the  purpose  of  the  business  in  Egypt? 

A     General  marketing,  and  we  had  a  conversation  with 
—  I  think  it  was  the  wife  of  the  deceased  Shah.   She  was 
then  in  Egypt. 

Q     And  what  was  the  nature  of  the  conversation  with 
the  Shah's  wife? 

A     General  conversation  about  conditions,  politics, 
so  forth,  what  she  was  planning  to  do. 





Q     No  specific  reason  for  the  visit? 

A     No. 

Q     Who  knew  the  Shah's  wife,  you  or  Mr.  Hakim? 

A     Mr.  Hakim. 

Q     Was  there  any  other  business  purpose  for  the  trip 
to  Egypt? 

A     No.   Just  the  overall  logistics  problems,  problem 
solving  and  meeting  with  the  Shah's  wife. 

Q     Problem  solving  for  what? 

A     Well,  there  were  some  proposals  we  put  in  at 
various  times  for  modular  storage  systems  to  support  various 
technical  systems. 

Q     When  was  the  earliest  time  that  you  heard  Zucker's 
name?   Does  it  go  back  to  the  '70s? 

A     I  don't  know.   The  earliest  time  I  ever  heard 
Zucker's  name  probably  goes  back  to  the  '80s  after  I  retired 
in  1979.   I  think  I  started  in  business  —  let's  see  — 
did  some  work  for  Hakim,  and  it  was  about  that  time.   We 
can  look  in  here  when  I  did  work  for  HeUcim,  and  it  was  after 
the  start  of  the  Iran-Iraq  War,  which  is  in  September  '80, 
so  it  was  after  1980. 

Q     Did  Mr.  Zucker's  name  ever  come  up  in  the  context  I 




of  consulting  work  with  EATSCO? 

A     Not  that  I  know  of . 

Q     Have  you  heard  of  a  company  called  lOS? 

A     Is  this  the  famous  Bernie  Kornfield,  the  investment 
company  going  back  a  number  of  years? 

Q     Yes. 

A     Yes,  I  have  heard  of  it. 

Q     Do  you  know  any  of  the  individuals  who  were 
involved  in  that  company? 

A     No.   But  I  heard  somewhere  —  and  this  is  not  the 
first  time  these  questions  have  come  up,  so  I  heard  somewhere 
in  this  panoply  of  questions  that  Zucker  was  employed  by 
Kornfeld  and  Zucker  is  a  tax  expert,  allegedly. 

Q     Do  you  know  that  there  was  an  assistant  to 
von  Marbod,  a  General  Fish? 

A     Do  I  know  him?   I  have  heard  of  the  name,  but  I 
don't  ever  recall  meeting  him. 

Q     Do  you  know  of  a  company  called  Coastal  Caribbean 
Oil  Company? 

A     Yes. 

Q     What  can  you  tell  me  about  Coastal  Caribbean? 





A     I  already  discussed  that.   That  was  the  company 
that  I  did  some  work  for,  the  Bernstein  Brothers,  on  offshore 
Florida  leases,  that  Coastal  Caribbean  was  involved  in. 

Q     Has  Mr.  Zucker's  name  ever  come  up  in  the  context 
of  Coastal  Caribbean? 

A     Not  that  I'm  aware  of. 

Q     Do  you  know  an  Edmund  Safra  —  S-a-f-r-a? 

A     No,  that's  not  a  name  that  rings  a  bell. 

Q     In  international  banking? 

A     No,  that  doesn't  tell  me  anything.   That's  not  a 
name  that  I  know. 

Q     Have  you  had  any  contact  with  any  other  people 
associated  with  Zucker  or  know  Zucker? 

A     You  have  to  phrase  that  some  other  way.   I'm  not 
sure   follow  you,  what  you  mean  by  that. 

Q     For  example,  have  you  been  introduced  to  people 
who  are  friends  or  business  associates  of  Mr.  Zucker? 

Q     No,  I  don't  recall  meeting  anybody,  you  know, 
that  has  been  portrayed  as  a  business  friend  of  his.   All 
I  can  recall  is  having  met  the  man  twice. 

Q     Have  you  ever  heard  of  an  oil  company  called 
PROSOL  —  P-R-0-S-O-L? 




A     No,  never  heard  of  it. 

Q     What  about  a  Mr.  Al  Bagen,  who  trades  in  Chemicals? 
A     No.   I  don't  know  anything  adaout  him.   That's  a 
fairly  common  name.   Where  is  he  located? 
Q     Florida. 

A     No,  I  would  say,  no,  I  have  not  heard  of  him. 
Q     Or  Canada? 
A     No. 

MR.  MOSKY:   Can  we  go  off  the  record  one  second? 
(Discussion  off  the  record.) 
MR.  MONSKY:   Back  on  the  record. 
Q     Do  you  know  of  two  lawyers  in  Californa  named  Jones 
and  Barnett? 

A     No,  those  names  don't  mean  anything  to  me. 
Q     Were  you  ever  aware  of  a  fact  that  General  Secord 
bought  some  pocket  computers  from  Ed  Wilson? 

A     No,  I'm  not  aware  of  any  pocket  computers  or  any 
computers '  transaction  between  Ed  Wilson  and  General 
Secord.   I  never  recall  anybody  discussing  computer 

MR.  MONSKY:   Off  the  record  one  more  time. 




(Discussion  off  the  record.) 

MR.  HOLMES:   I  Still  have  a  few  more. 

Q     Following  on  the  computer  question,  did  you  ever 
discuss  with  Hakim  the  sale  by  Hakim  of  computer  systems 
or  computer  support  systems  in  the  Middle  East? 

A     I  don't  ever  recall  that  coming  up.   I  don't  have 
any  memory  of  computers  coming  up. 

Q  Turning  to  Coastal  Caribbean  Oil  Company,  you 
didn't  ncime  it  at  the  time  we  went  through  it  the  first 
time.   I  need  to  know  a  little  more  about  that. 

Who  were  the  principals  in  Coastal  Caribbean? 
A     I  have  forgotten  the  principals  in  it,  but  the 
Bernstein  Brothers  had  a  large  equity  position  in  Coastal 
Caribbean  stock.   It's  a  stock  that's  traded  on  several 
over-the-counter  exchanges.   Boston,  Philadelphia,  Seattle 
and  so  forth. 

Q     Were  there  other  principals  besides  the  Bernsteins? 
A     Yes.   I'm  saying  he  had  a  large  —  I  told  you  I'm 
getting  tired.   It's  late  in  the  day.   It's  a  company  that 
issues  a  standard  annual  report  once  a  year,  and  it's  got 





a  normal  board  of  directors  and  has  an  annual  meeting.   I 
forget  the  guy's  name.   The  guy  has  been  president  of  it 
for  a  long  time.   I  just  can't  think  of  his  name  at  the 

Q     Have  you  or  anybody  associated  with  your  companies 
ever  invested  in  Coastal  Caribbean? 

A     Yes.   I  own  a  few  shares  in  Coastal  Caribbean. 

Q     And  when  did  you  purchase  those  shares? 

A     I  don't  know.   I  guess  that  at  the  time  I  started 
working,  doing  some  work  for  Mr.  Bernstein. 

Q     Approximately  when? 

A     I  told  you  I  remember  that  happened  shortly  after 
I  retired.   It  could  have  been  '79,  could  have  been  '80. 

Q     Do  you  know  anybody  else  who  has  shares  in  Coastal 

A     The  only  other  person  I  know  of  who  has  shares  in 
it  and  monitors  it  fairly  closely  is  Felix  Rodriguez. 

Q     And  how  do  you  know  of  his  interest  in  it? 

A     Because  he  discussed  it  with  me.   Essentially, 
I  met  Bernstein  through  Felix,  and  I  know  that  he  has  some 
shares  in  it  or  had  sane  shares  in  it  and  is  monitoring 
developments  in  the  company  very  closely. 




Q     Felix  Rodriguez? 
A      Yes. 

Q      Do  you  know  what  the  approximate  value  of  those 
shares  are? 

A      No,  I  don't. 

Q     Is  it  a  substantial  block  of  shares? 
A     No.   I  don't  know  that.   I  really  don't  know. 
MR.  HOLMES:   Let  me  check  off  some  things. 
MR.  MONSKY:   May  I  go  to  Coastal  Caribbean? 
MR.  HOLMES:   Of  course. 

Q     Did  you  know  Richard  Secord  owned  stock  in 
Coastal  Caribbean? 

A     No,  I  don't  think  I  ever  heard  him  discuss  Coastal. 
Q     He  acquired  his  stock  about  the  same  time  you 
acquired  yours. 

Was  there  something  special  about  Coastal 
Caribbean  that  led  you  to  acquire  your  shares? 

A     No.   It  was  a  situation  that  this  individual, 
Maury  Bernstein,  was  very  enthusiastic  about,  and  he ' s  a 
fellow  who  made  an  awful  lot  of  money  in  the  stock  market,  and 





he  got  me  interested  in  it.   I  did  some  work  for  him  on  the 
thing,  in  terms  o£  leases  off  of  Florida,  and  I  bought  shares 
in  it. 

Q     Do  you  know  if  he  knows  Richard  Secord? 

A     I  don't  think  he  does.   That's  an  opinion.   I  don't 
think  he  does . 

Q     Have  you  met  Mr.  Dill  or  Mr.  Pearman  — 

A     No,  I  have  not.   I'm  not  familiar  with  those  names. 

Q     Do  I  understand  that  you  purchased  shares  in 
Coastal  Caribbean  but  have  never  sold  shares? 

A     I  have  sold  and  I  have  purchased. 

Q     In  what  order? 

A     Well,  I  would  have  had  to  buy  them  to  be  able 
to  sell  them,  and  so  I  bought  some  and  then  there  have  been 
stock  options  at  various  times.   I  purchased  the  stock 
options  and  sold,  and  so  forth.   I  bought  some  shares. 

Q     What  I'm  getting  at  is,  have  you  traded  them  on 
a  buy-sell,  buy-sell  basis  or  just  been  one  purchase  and 
then  a  partial  sale? 






jj      A     Basically,  I  have  held  them  for  a  substantial 
;'  period  of  time.   You're  asking  was  I  turning  in  the  stock 
or  something  on  a  speculative  basis,  the  answer  is  no. 

Q     You  purchased  and  then  you  sold  some? 

A     Right. 

Q     And  then  did  you  purchase  more  later  after  the 
first  sale? 

A     At  different  times  I  had  purchased  and  sole.   As 
the  stock  has  fluctuated,  as  its  problems  have  changed. 

Q     And  you  have  monitored  those  changes  yourself,  I 

A.    Yes. 

Q     But  you  never  discussed  those  changes  with 

A     I  don't  ever  recall  discussing  those  chemges  with 

Q     You  never  discussed  the  company  at  all  with 

A     Not  that  I  can  think  of.   I  don't  recall  discussing 
it  with  him. 

Q     And  other  than  Rodriguez,  you  don't  know  of 




anybody  else  who  owns  stock  other  than  Bernstein? 

A     Bernstein.   I  know  other  people.   I  can't  think  of 
the  guy's  name.   There's  a  fellow  in  Philadelphia  that's 
accumulated  a  lot  of  stock.   He's  an  investor.   I  can't  think 
of  his  name.   I  can't  dredge  it  out  of  my  memory  right  now. 

Q     have  you  ever  heard  of  a  man  named  Sam  Bamieh  — 
B-a-m-i-e-h,  a  Saudi  Arabian-American  businessman? 

A     Oh,  wait  a  minute.   Is  this  the  fellow  who  was 
written  in  "Regardie' s"  magazine  recently? 

Q     I  don't  know  whether  he  has  been,  but  it  makes 
sense.   He  lives  here  in  the  D.C.  area. 

A     There  was  an  article  that  appeared  in  some 
magazine  about  a  guy  who's  name  is  very  similar  to  that. 
I  don't  know  him  personally. 

Q     Have  you  done  any  business  with  any  company  of 

A     No,  I  have  not. 

Q     Do  you  know  of  a  cranpany  named  IDG,  for  Industrial 
Development  Group? 

A     No,  I'm  not  fauniliar  with  that. 

Q     Have  you  ever  heard  of  a  company  known  as  ADG,  for 
Arab  Development  Group? 




A     No,  I  have  not. 

Q     Do  you  know  of  a  company  named  Argo  Systems? 

A     Argo  Systems?   No. 

Q     They  dealt,  at  one  time,  in  laser  sights. 

A     No,  I'm  not. 

Q     Have  you  ever  discussed  any  laser  sight  business 
opportunities  with  Hakim  or  Secord? 

A     I  don't  have  any  memory  of  laser  sights  ever  coming 
up  in  any  discussion. 

Q     Have  you  done  any  business  discussions  about  laser 
sights  with  any  person? 

A     Not  that  I  know  of,  no.   I  don't  recall  any  laser 
sights . 

Q     Do  you  know  of  a  company  n2uned  Century  Arms? 

A     Century  Arms? 

Q     Based  in  Canada. 

A     No ,  I  don ' t . 

Q     Have  you  ever  met  an  individual  named  Mandy 
Higginsberg,  also  known  as  Weisenstein? 

A     No,  I;m  not  familiar  with  that  n2une. 

Q     Do  you  know  of  a  company  named  Trans  World  Arms? 

A     No,  I'm  not  fauniliar  with  them. 





Q     Have  you  ever  discussed  a  machine  gun  manufacturing 
business  opportunity  with  any  person  over  the  years  in  the 
last  several  years? 

A     I  don't  know  that  I  —  a  machine  gun? 

MR.    MC  KAY:   Machine  gune  manufacturing. 
THE  WITNESS:   I  talked  with  a  fellow  a  couple  of 
years  ago  from  a  company  called  Tround  --  T-r-o-u-n-d  -- 
that  makes  a  cartridge  that  is  shot  into  the  face  of 
rock  formations  for  mining  for  drilling,  but  this  fellow  has 
been  developing  a  gun  called  the  Tround  gun,  and  it's  like 
a  Catling  gun.   I  talked  with  him  periodically,  and  he  called 
me  up  about  a  year  ago.   He  was  involved  here  in  a  show 
in  the  Washington  area.   He  asked  me  to  come  down  to  the 
show  where  he  was  participating  here  in  some  defense  thing. 
I  didn't  get  a  chance  to  go  to  it. 

Q     What  are  the  applications  of  this  Tround  gun? 

A     I  don't  know.   It  throws  out  a  round  which  has 
a  lot  of  little  needles  in  it.   You  might  be  able  to  use  it 
in  SDI  or  something  like  that. 

Q     Could  you  explain  that  to  me? 

A     Well,  you  throw  out  a  big  field  of  fire,  and  you're 
blanketing  the  sky  with  metal,  and  if  metal  has  any  impact 




on  penetrating  anything  that's  flying  through  that. 

Q     It's  not  designed  as   an  antipersonnel  weapon 
at  all?   It's  an  anti-electronic  measures  weapon? 

A     I  would  say  it  could  be  used  against  personnel. 
He  had,  at  one  time,  developed  a  hand  gun  many  years  ago 
on  this  particular  principle  and  developed  some  sort  of 
rifle  at  this  point  in  time  looking  at  it  for  a  Catling 
gun  type  of  arrangement. 

Q     I  take   it  you  never  had  any  business  involvement 
with  this? 

A     No.   I  went  up  and  looked  at  his  plant,  looked 
at  what  he  was  doing  in  the  drilling  area.   I  never  did  any 
business.   I  never  bought  anything  from  him,  so  forth.   I  did 
look  at  it. 

Q     Have  you  ever  had  any  business  —  and  of  course, 
I'm  always  including  the  companies  —  with  the  Saudi  Arabia 
National  Guard? 

A     No,  I  have  never  worked  for  the  Saudi  Arabia 
National  Guard. 

Q     Since  you  retired,  have  you  had  any  business  with 
any  shipping  company  other  than  the  ones  that  you  have 
already  mentioned? 

liii^unJOn  I 




A     No.   I  can't  recall  any. 
Q     Do  you  know  a  man  named  Ed  DeGaray? 
A     No,  that  name  doesn't  tell  me  anything. 
Q     Does  Corporate  Air  Services  mean  anything  to  you? 
A     No.   I  think  that  was  one  that  was  on  here. 
Q     Yes.   Have  you  or  any  company  that's  on  the  list 
that  we  made  this  morning  or  that  is  one  of  the  ones  you 
responded  on  behalf  of,  had  any  deposit  in  any  bank  account 
outside  of  the  United  States,  other  than  the  construction- 
related  bank  account  in  Kuwait? 

MR.  MC  KAY:   I  don't  understand  which  company 
you're  asking  him  to  respond  to.   We  had  four  companies 
that  were  subpoenaed.   What  else  are  you  asking  him  to 
respond  to? 

MR.  HOLMES:   I  made  a  list  of  companies  this 
morning,  the  ones  he  was  associated  with: 

API,  RIT,  SSI,  Triangle  Associates,  STC,  EATSCO, 
Treuis-World  and  Bernstein  Brothers. 

THE  WITNESS:   What's  your  question  again? 
MR.  HOLMES:   That's  an  inappropriate  list, 
because  I  included  Trans-World  Oil  and  STC. 





BY   MR.    HOLMES: 

Q     Have  you  or  any  company  that  you  were  a  director 
of,  officer  of  or  controlling  employee  of,  ever  had  a 
deposit  in  a  bank  account  outside  of  the  United  States, 
other  than  in  Kuwait? 

A     I  don't  consider  myself  to  be  those  categories 
you  used  to  apply  to  TGS  and  RAI,  and  we  have  no  accounts    ; 
other  than  the  Kuwait  bank  account  that  we  had  in  a  foreign 
bank  account. 

Q     You  lost  me  when  you  qualified  it  at  the  beginning. 

A     Well,  I  have  only  been  an  officer  or  director, 
so  forth,  whatever  the  other  items  were  that  you  mentioned, 
for  the  company  TGS  International  and  RAI.   Those  companies. 
The  only  foreign  bank  account  we  had  was  an  accommodation 
account  in  Kuwait,  where  we  had  to  pay  for  local  materials. 

Q     Let  me  ask  the  question  in  a  slightly  different 
way  to  get  a  slightly  different  situation. 

Have  you,  through  any  mechanism,  whether  it's 
by  ownership  of  shares  in  a  corporation  or  control  of  the 
corporation  or  through  a  lawyer  who  controls  the  corporation! 
or  any  other  agency  or  any  other  method  at  all,  had  control  ; 
of  any  funds  outside  the  United  States,  other  than  the 




Kuwait  bank  account? 

A     No,  I  haven't  No  corporate  activity  that  I  know 

Q     We're  not  talking  strictly  corporate  activity. 
I  want  to  know  if  you,  Theodore  Shackley,  through  any  method, 
corporate  or  noncorporate,  have  had  control  of  a  foreign 
bank  accovint,  whether  it's  in  a  bank  or  fiduciary  or 

A     I'm  not  sure  what  you're  —  I've  tried  to  answer 
the  question.   I  told  I  don't  through  corporations.   What 
else  are  you  trying  to  get  at?   I  told  you  the  only 
companies  I  have  been  an  officer  or  shareholder  in  have  been 
TGS  and  RAI .   I'm  not  following  you.   You've  lost  me 
somehow  with  the  other  part  of  your  question. 

Q     Mr.  Shackley,  I'm  sure  you're  aware,  through  your 
experience  in  the  CIA,  that  there  are  a  number  of  ways  of 
controlling  funds  without  having  your  name  on  the  bank 
account  or  without  have  specific  direct  corporate  control 
of  a  bank  account. 

Do  you  agree  so  far? 

A     Yes.   But  I  told  you,  I  don't  have  any  — 

Q     For  exeunple,  a  person  can  have  a  corporation 





created  in  the  name  of  ABC  in  Panama  and  then  instruct  his 
Paneunanian  lawyer  to  have  that  corporation  open  an  account 
in  a  bank  in  some  other  country,  and  then  that  corporation 
can  control  the  money  at  the  direction  of  the  person  who 
originally  opened  the  account,  without  having  his  name 
associated  with  it. 

A     Haven't  I  answered  that?   I  told  you  I  don't  have 
any  or  haven't  had  any  corporate-related  accounts  except  the 
Kuwait  account. 

Q     I  want  your  answer  on  the  ultimate  question  of 
whether  you,  Mr.  Shackely,  through  any  mechanism  at  all,  have 
had  control  — 

A     Are  you  talking  about  me,  personally,  as  an 
individual  or  talking  about  corporate  structure? 

Q     Either  one.   Personal  or  in  a  corporate  structure 
or  through  a  partnership,  through  an  anonymous  society  or 
any  other  mechanism,  have  you  had  the  eUjility  to  direct  the 
payment  of  funds  from  any  foreign  account  at  any  time  since 
you  retired? 

A  In  a  corporate  activity,  none  whatsoever.  At  one 
point  I  had  a  personal  account  in  Bermuda,  where  I  had  a  CD 
in  a  Bermuda  bank. 

Q     When  was  that? 




A     That  was  probably  about  1980. 

Q     And  the  amount  of  the  CD? 

A     I  don't  remember.   It  was  probably  about  $15,000, 
maybe  $20,000. 

Q     And  the  source  of  the  funds? 

A     Those  were  funds  that  I  earned  in  lecturing  and 
that  Italian  war  game  that  I  discussed  with  you. 

Q     So  they  had  never  been  brought  ashore  from  the 
Italian  payment,  paid  into  Bermuda? 

A     No,  I  was  paid  by  Mr.  Ledeen.   I  opened  an  account 
in  Bermuda.   I  had  that  account  for  a  short  period  of  time, 
because  of  the  difference  in  interest  rate.   I  subsequently 
closed  that  account,  brought  the  money  to  the  United  States, 
and  that's  it.   It's  on  my  income  tax,  and  so  forth. 

Q  The  entire  cunount  was  paid  you  by  Ledeen? 

A     Yes. 

Q     And  it  was  in  exchange  for  your  services  in  the 
Italan  war  games? 

A     Right . 

Q     So  lecturing  was  as  a  component  of  the  war  games? 

A     Right . 




Q     And  was  approximately  $15,000  or  $20,000? 
A     I  think  that's  what  the  account  was;  right. 

Q     When  did  you  bring  it  ashore? 

A     I  don't  know.   Normally,  I  think  I  did  that 
through  a  bank  transfer  or  through  a  check. 

Q     When  it  was  brought  into  the  United  States,  it 
was  brought  into  the  United  States  as  a  credit,  as  opposed 
to  a  loan? 

A     Hes.   I  mean,  it  came   into  my  account.   It  wasn't 
a  loan  from  me  to  me,  if  that's  what  you're  saying, 

Q     I'm  not  saying  that. 

A     No,  I  mean,  if  that's  what  you're  asking,  was  it 
a  loan  from  myself  to  myself,  the  answer  is  no.   It  just 
came  in,  and  it  was  a  deposit  to  my  account,  and  that  was 

Q     And  the  name  on  the  account? 

A     It  had  my  name. 

Q     I  take  it  then,  from  the  answer  to  the  previous 
questions,  that  you  have  never  controlled  funds  outside  of 
the  United  States  in  another  name? 

A     No.   Since  I  have  retired,  I  haven't  had  any. 





Q     No,  within  the  United  States  — 

MR.  MONSKY:   Let  me  ask,  can  we  go  off  the  record 
one  second? 

(Discussion  off  the  record.) 

Q     Mr.  Shackley,  while  we  were  off  the. record,  we 
discussed  a  couple  of  examples  of  possibilities  of  how  money 
or  representatives  of  money  can  be  controlled,  indirectly. 

For  example,  an  oral  agreement  with  a  person  to 
act  as  agent  or  representative  of  you  in  controlling  money 
for  you  or,  as  another  example,  a  bearer  certificate  or  a 
letter  to  a  Swiss  fiduciary  naming  you  as  the  true  owner  of 
the  particular  account  or  other  agreements  by  which  a  person 
can  become  an  owner  of  an  account  without  having  his  name 
on  the  account  or  any  paper  evidence  of  his  control  over  the 
account,  and  you  have  indicated  that  not  only  do  none  of 
these  examples  apply  to  you,  but  no  other  similar  exeunple 

And  I'll  ask  you  this  question  to  cement  that. 

Mr.  Shackley,  other  than  government  funds,  have 
you  ever  had,  through  any  mechanism,  control  of  any  funds 
outside  of  the  United  States  other  than  your  Kuwait  account? 





A     I  was  just  talking  about  the  Bermuda  account. 
Q     And  your  Bermuda  account? 

A     No,  I  haven't,  other  than  those  that  we  have 
discussed.   That  is,  the  Kuwait  account  and  the  Bermuda 

Q     And  that  includes  the  years  that  you  were  in 
government  service  but  excludes  money  that  ?ou  controlled 
on  behalf  of  the  government  during  those  years? 
A     Yes,  that's  correct. 

MR.  HOLMES:   Mr.  Shackley,  I'd  like  to  prevail 
on  you,  if  I  can.   I  know  you're  tried,  but  I'd  like  your 
opinion  on  one  thing. 

We  can  go  off  the  record  and  discuss  it,  if  you 

Let's  go  off  the  record. 
(Discussion  off  the  record.) 
MR.  MONSKY:   On  the  record. 

Q     Have  you  heard  of  a  company  called  ARVAG  — 

A     No,  I  have  not. 





Q     A  Swiss  corporation? 

A     NO. 

Q     ICT,  International  Chemical  Trading? 

A     No,  not  familiar  with  that. 

Q     Karma  Trading  Corp.? 

A     No.   I  don't  believe  I've  ever  run  across  those. 

Q     Overseas  Corporation? 

A     No,  I'm  not  familiar  with  them. 

Q     And  with  respect  to  BDM,  my  understanding  is,  you 
haven't  had  an  transactions  with  them  in  the  past  few  years? 

A     I  have  never  really  had  a  transaction  with  them. 
I  had  one  conversation  a  number  of  years  ago  with  a  friend 
of  mine,  who  asked  me  to  fill  out  some  forms  for  him  to  be 
on  a  consultant  call  list  and  never  did  do  it,  and  I  have 
never  done  any  work  for  them. 

MR.  HOLMES:   That  concludes  our  deposition, 
Mr.  Shackley. 

I  appreciate  your  time. 

(Whereupon,  at  7:25  p.m.,  the  taking  of  the 
deposition  was  concluded.) 






Basic  security  requirements  contained  in  Department  of  Justice  Regulations 
(28  CFR  Put  17). 

The  unauthorized  disclosure  of  the  information  contained  in  the  attached  docu- 
ment(s)  could  reasonably  be  expected  to  cause  exceptionally  grave  damage  to  the 
national  security. 

Handling,  storage,  reproduction  and  disposition  of  the  attached  document($)  will 
be  in  accordance  with  policies  and  procedures  set  forth  in  regulations  cited  above. 

^*^  L2^  **^7 

fflto  mtr  *tm  1$  —rltiM*^  »*«■  itpfmt^  ficm  datn/M  iocwmnal 



Tuesday,  April  21,  1987 

U.S.  House  of  Representatives, 
Select  Committee  to  Investigate  Covert 
Anns  Transactions  with  Iran, 
Washington,  D.C. 





^3       The  committee  met,  pursuant  to  call,  at  2:00  p.m.,  in 

14  Room  6205,  Department  of  State,  Washington,  D.C,  with 

15  w.  Neil  Eggleston  (Deputy  Chief  Counsel  of  the  House  Select 

16  Committee)  presiding. 

17  Present:   W.  Nell  Eggleston,  Deputy  Chief  Counsel, 

18  Timothy  E.  Tray lor.  Counsel,  Steven  Berry,  Associate  Staff 

19  Member,  Minority  Staff,  on  behalf  of  the  House  Select  Committee 

20  OD  Covert  Arms  Transactions  with  Iran;'  and  Terry  A.  Smiljanich 

21  on  behalf  of  the  Senate  Select  Coonlttea  on  Secret  Military 

22  Assistance  to  Iran  and  the  Nicaraguan  Opposition. 






having  b«en  first  duly  sworn,  was  called  as  a  witness  herein, 
and  was  examined  and  testified  as  follows: 
^        Q    It  is  Dr.  Sigur,  correct? 

8  A    That  is  right. 

9  Q    Olcay. 
A    However  you  want  to  do  it. 
Q    Or.  Sigur,  my  name  is  Neil  Eggleston.   we  have  been 

^2    introduced.   I  am  Deputy  Chief  Counsel  of  the  House  Select 
^3    Committee  to  Investigate  Covert  Arms  Transactions  with  Iran. 

I  am  here  today  pursu^tnt  to  the  Committee '  s  mandate  to 
^5    investigate  the  circumstances  surrounding  the  Iran/contra 

16  affair. 

17  The  paraBMters  of  the  investigation  are  all  spelled  out 

18  in  what  !•  called  H.  Resolution  12.   Terry  Smitjanich  is  with 

19  the  Senate  Connittee  and  he  is  also  here  and  when  I  am  done 

20  will  h«v«  questions  on  behalf  of  the  Senate  that  he  would 

21  like  to  pose  to  you. 

22  So  it  is  really  being  conducted  in  the  guise,  I  think, 

23  of  a  joint  deposition  of  you. 

24  Let  me  start,  if  I  could,  by  just  asking  you  if  you 

25  could  generally  tell  us  in  a  brief  fashion  about  ;^ypur  own 

' ""  ^- '  •■~i  1  n  o  c*  r 


TOP  i3D 




























background,  where  you  were  born,  grew  up,  your  education 

and  your  jobs  prior  to  the  time  you  first  began  with  the  NSC. 

A    Well,  of  course,  I  have  got  a  number  of  years  behind 

Q    That  is  why  I  — 

A    That  is  quite  a  little  ways.   I  don't  know  how  far 
back  you  want  to  go. 

U    Let's  just  go  with  your  education  a  little  bit. 

A    I  got  my  degrees  from  the  University  of  Michigan, 
B.A. ,  M.A. ,  and  Ph.D.,  and  I  did  my  work  in  history.  Far 
Eastern  h  story.   Then  I  worked  at  the  university  for  a  time 
as  an  assistant  director  of  international  affairs,  did  a 
little  teaching  —  in  the  international  center,  not  internation 
affairs,  assistant  director  of  the  international  center, 

Went  to  the  Asian  Foundation -for  quite  a  number  of  years. 
I  was  with  them  from  1956  through  19S9  and  then  I  took  off  a 
couple  years.   I  was  with  the  Gotham  Foundation  and  did 
some  teaching  in  Japan  and  then  I  in  1962  went  to  Afghanistan 
as  the  Asian  Foundation  representative.-  stayed  with  that 
organization  until  1972  when  I  became  the  director  of  the 
Institute  for  Sino-Soviet  Studies,  professor  of  international 
affairs,  George  Washington  University. 

Stayed  there  until  1982  when  I  went  with  the  National 
Security  Council  in  July  of  1982.   And  I  took  leave  from  the 


"^MClHO^eihi^p  SEGRFT- 




























university;  and  went  bac)t  to  the  university  full  time  in 
October  of  1984,  remained  a  consultant  to  the  National 
Security  Council  and  was  at  the  University  until  March  1986 
when  I  took  this  job. 

Q    What  is  your  current  title? 

A    Assistant  Secretary  of  State  for  East  Asian  and 
Pacific  Affairs. 

Q    Maybe  if  you  could  just  tell  me  very  briefly  what  you^ 
current  job  entails,  what  are  your  duties  here  at  the  State 

A    Well,  I  am  responsible  really  for  all  affairs 
involving  the  East  Asian  and  Pacific  region  and  for  policy  in 
that  region.   That  covers  China,  Japan,  Korea,  Southeast 
Asia,  Taiwan,  Australia,  New  Zealand,  Pacific  Islands,  Burma. 

Q    Let  me  — 

A    I  am  chief  advisor,  in  other  words,  I  guess  the  way 
we  put  it,  to  the  Secretary  of  State. 

Q    Let  me   *rect  your  attention  back  to  the  period  of 
tine  between  July  of  1982  and  October  of  1984  when  you  were 
actually,  I  take  it,  assigned  to  the  »SC  not  as  a  consultant, 
but  you  were  actually  there. 

A    That  is  right. 

Q    Can  you  describe  what  your  jobs  were  or  what  your  job 
was  during  that  period  of  time  and  what  your  duties  were? 

A    Again,  from  the  point  of  view  of  the  National  Securit 

bNClA^biJpfelt^  SECRET 




























Council,  I  oversaw  Asian  security  nutters,  Asian  affairs 

as  the  NSC  operated.   I  was  responsible  to  the  National 
Security  Advisor  at  the  time  and  I  came  in  when  Bill  Clark 
was  the  National  Security  Advisor  and  I  stayed  on  when 
McFarlane  took  over  and  then,  of  course,  stayed  as 
consultant.   My  duties  were  quite  broad  in  the  sense  that  I 
dealt  with  the  whole  of  East  Asia  and  the  Pacific  and  I  had 
two  people  who  worked  with  me. 

Q    Who  were  they? 

A    David  Locks  and  Dick  Childress.   Locks  was  China, 
but  also  he  was,  basically  he  had  an  academic  background, 
I  mean,  economic  background  so  he  was  helpful  in  that  regard. 
Childress  was  a  military  man  so  he  was  helpful  in  that 
regard.   I  was  not,  of  course. 

I  didn ' t  have  that  kind  of  background . 

Q    Were  you  then  Director  of  the  Directorate  on  East 
Asian  Affairs? 

A    Yes,  as  the  Director. 

Q    And  there  were  these  two  other  people  in  your 

A    Yes. 

Q    I  take  it  your  job  was  basically,  advising  and 
coordinating,  advising  the  National  Security  Advisor  on  East 

A    On  East  Asia  and  the  Pacific,  yes. 

uMg1a3S!Fjed  ^top  secret 




























t  btiKjifjLi 

Q         Did  your  title  and  job  description  remain 
substantially  the  same  throughout  the  period  of  time? 

A    Throughout  the  period,  except  in  July  of  1983 
I  was  named  Special  Assistant  to  the  President. 

Q    Was  that  a  name  change,  change  of  title  or  just 
a  change  in  the  ]obs? 

A  No.  Didn't  mean  any  change  in  job  at  all.  i  did 
exactly  the  same  thing. 

Q    I  understand  that  -- 

A  The  working  title  was  Senior  Director  and  Special 
Assistant  to  the  President  which  meant  you  could  eat  in  the 
White  House  mess. 

Q    I  had  heard  there  were  changes  in  the  way  it  was 
set  up. 

A    But  the  job  was  exactly  the  same. 

Q    OJcay . 

A    The  job  was  no  different  at  all. 

Q    Let  m«  take  you  then  before  I  sort  of  go  back  to 
that  time  period,  after  you  left  there  in  October  1984,  and 
went  back  to  —  did  you  say  Georgetovm'  or  George  Washington? 

A    George  Washington. 

Q    You  remained  as  a  consultant  for  a  period  of  time  to 
the  NSC. 

A    Yes. 

Q    How  long  did  that  last? 

yNJiftSsrr.iii)  top  secret 




























A    I  remained  until  I  cane  here  in  March  1986. 

Q    Did  you  —  if  you  could  describe  the  circumstances 
around  that.   Did  you  have  an  office  there  still? 

A    I  kept  the  same  office  I  had  and,  in  fact,  I  still 
oversaw  the  policy  and  still  reported  directly  to  the 
National  Security  Advisor,  but  I  didn't  spend  nearly  the 
amount  of  time  on  it.   I  tried  to  spend,  say,  up  to  three  or 
four  hours  a  day,  I  would  usually  go  over,  say,  about  a 
quarter  of  seven  in  the  morning  or  something,  and  attend  the 
7:30  staff  meeting,  stay  maybe  until  quarter  of  nine  or 
nine,  and  go  over  to  the  university  and  spend  the  rest  of  the 
day  there  and  go  back  for  a  couple  of  hours  in  the 

By  Mr.  Berry: 

0    I  an  Steve  Berry.  Was  that  normal  or  usual?  Were 
there  other  consultants  with  similar  duties? 

A    I  am  not  sure  anyone  else  had  anything  quite  like 
that,  Z  don't  believe. 

Q    You  retained  all  your  securiTty  clearances  and 
everything  and  had  the  same  access? 

A    Yes.   That  is  right.   And  there  are  consultants 
who  have  done  that,  retained  their  security  clearances  as  far 
as  I  know. 

Q    Were  there  other  consultants  at  the  time  that  did 


£0    TOrCCCRET 








h         I  can't  tell  you.   I  really  don't  Icnow. 
Q    Were  you  replaced?  Was  your  position  in  1984 


A     No.   It  was  not. 

Q    So  you  essentially  retained  your  job? 

A    Yes. 

Q    How  many  people  v(f^nq   under  you,  did  the  same 
two  individuals  remain  in  your  directorate? 

A    Yes. 

Q    I  take  it  after  Mr.  Poindexter  became  National 
security  Advisor  you  continued  to  consult  with  him? 

A    Continued  the  same,  that  is  right. 

Q    Let  me  as)t  you  a  few  other  questions  about  the 
organization  of  the  NSC  or  about  your  participation.   During 
the  period  of  tine  that  you  were  there  as  a  regular  senior 
director,  1  take  it  you  attended  the  senior  members  staff 
nM«tinga;  ii  that  right? 
A    Yes. 
Q    And  during  that  period  of  time  were  they  held  on  a 

regular  basis? 

A    Yes,  as  I  remember  they  were. 

Q    Did  you  continue  to  attend  those? 







^1'  Di-jOiVJbl 

A    I  continued  to  attend  those. 

Q    I  understand  that  during  19  35  and  1986  they  were  held 
on  four  days  a  week.   Am  I  correct  in  that? 

A    I  thought  they  were  £ive. 

I  don't  know  where  you  got  the  four  from. 

Q    I  thought  for  some  reason  on  Wednesday  it  was 

A    You  may  be  right  about  that.   Sometimes  there  was  no 
meeting  on  Wednesday,  but  I  am  not  sure  that  was  true  all  the 

Q    It  is  not  important. 

A    That  is  right,  though.   Sometimes  Wednesday  was 
omitted  because  there  was  a  breakfast  that  Poindexter  and 
Shultz  and  Weinberger  held,  and  Casey.   That  is  right.   Yes. 
You  are  right. 

But  that  waa  not  always  the  case.   Quite  often,  in  fact, 
those  breakfasts  were  not  held.   But  you  are  right  about 
that,  yes. 

Z  had  forgotten  that. 

Q    Z  assumed  you  had  attended  them.   I  understand 
those  were  for  senior  members.  Were  there  also,  I  take  it, 
staff  meetings  that  involved  the  entire  staff  of  the  agency? 

A    Yes,  one  a  week. 

Q    Did  you  attend  those  as  well? 

A    Not  always.   Often  not.   Sometimes. 

0:'ii5l.A-jS3f  tED  TOP  SEC 







^^'W^xc^^  ULOltLl 

Q    Okay.   I  thought  you  might  not  have. 

A    Not  always. 

Q    Let  me,  having  covered  the  background  of  your 
involvement  at  NSC,  let  me  ask  you  questions  about  the 
various  areas  that  are  of  particular  relevance  to  this 

A    Sure . 

Q    What  I  hope  to  do  is  ask  you  as  to  each  of  the 
countries  your  best  recollection  and  ask  you  some  sort  of 
follow-up  questions. 

Let  me  first  ask  you  aboutl^^^^Band  if  you  could 
just  relate  to  me  as  best  you  recall  your  involvement  in 
that  event  I  would  appreciate  it. 

A    Well,  as  I  said  last  time,  Ollie  North  came  to  me  and 
I  thought  it  was  in  1985  and  I  hav«  been  looking  over  my 
calendar,  I  see  I  had  a  breakfast  meeting  with^^^|^^m|ii 

1984  but  1  can't  believe  it  was  that  early  on.   I 
thought  it  w««  in  1985,  but  I  don't  have  anything  in  my 
calendar  on  that.   In  any  event,  Ollie -North  came  to  me  and 
asked  if  I  would,  he  said  that  he  and  Bud  wanted  to  know  if  I 
would  get  in  touch  wiU^^^fcecause  they  understood  that 

ould  be  interested  in  helping  in  Central  America  with 
the  contra*.  ^^^^ 

And  I  said  I  would,  so  I  had  met  witA|H^I  believe 
it  was  for  breakfast  at  his  home  on  a  Saturday  —  that  is 






wyr  ouoxuui  ■ 


why  this  dat*  oe^HHVl984  caught  my  tyt. 
Q    Is  that  a  — 

A  Sut  that  seema  awfully  early.  I  didn't  think  it 
was  that  early.  But  maybe  it  wa*.  Maybe  I  an  wrong  about 
that.   But  I  didn't  think  so. 

I  thought  it  was  198S.   In  any  event,  I  had 
breakfast  with  hin  and  I  talked  to  hin  about  this.   Ollie 
had  told  me  that  it  was  a  desparate  situation  for  the 
contras  and  that  they  needed  funds  for  food  and  clothing  and 
medicine  and  all  that  sort  of  thing,  or  everything,  I  guess. 

So  I  spoke  to^^^B  in  that  regard  and  he  said,  well, 
they  had  an  interest  in  helping  financially,  but  through  the 
United  States  Government. 

I  went  back  after  the  breakfast  and  I  saw 
NcFarlane  and  I  told  Bud  about  this  conversation.   I  said 
they  say  they  have  an  interest,  but  they  want  to  provide  the 
money  through  the  U.S.  Government. 

He  says  that  is  impossible.  That  can't  be  done. 
Can't  do  that. 

So  X  told  North  that,  what  Bud  had  said,  as  well  as 
and  then  the  next  I  had  a  call  froa  Ollie  and  I  can't 
remember,  again,  I  thought  this  was  a  relatively  short  period 
of  time,  but  it  could  have  been  longer.  I  mean,  I  thought 
it  was  weeks.   It  could  have  been  months,  perhaps,  but  I  — 
I  just  don't  know. 

,a5S>^S^B  JPOP  OCCRET  " 


\  '■J  iBt  i"^^^'Ji»'li    u  L  U 

















But  In  any  event,  he  asked  if  I  could  arrange  to 
wlth^^Aand  have  him  talk^^^^^  And  he 
gave.aa  I  recall  then  —  I  am  not  sure  I  said  this  last 
time  —  but  I  think  if  I  remember  right,  he  talked  about  the 
having  someone  f rom^^^^^^^^^^^^^Kr 
^^^^himself  meet,  get  together  with  the  centres,  with  some  of 
the  contras. 

In  any  event,  I  arranged  a  meeting  betweei^^^Hand 
Ollie  to  take  place  at  the  Hay  Adams  Hotel.  The  only  — 
I  don't  have  a  date  for  that.   I  have  a  Hay  Adams  Hotel 
tea  with  nobody  listed  which  is  August  2,  1985.   That  is 

I  can't  swear  to  that,  but  it  is  possible  that  that 
was  the  date. 

Q    Okay. 

A    In  any  event,  I  brought 'Ollie  over  there,  introduced 
him  to^^^Hand  I  left  and  I  don't  know  what  the 
conversation  was.   The  next  thing  I  heard  was  --  again,  I  don't 
know  how  long  a  period  this  was,  I  really  don't  —  I  didn't 
think  it  was  that  long,  but  I  coul '  be' wrong,  the  next  I 
heard  was  that  Ollie  telling  me^^^^Hl  telling  me,  I  guess, 
I  had  a  call  fron^^^Hthat^^^^Hwas  prepared  to  offer 
million  dollars  to  the  contras. 

So  I  told  Ollie  this  and  again  on  the  timing  I  really 
don't  know  how  long  a  period  of  time  this  took,  bxit  Ollie  callec 


















-       V   -■-•.    ^■•ii'.'i." 

me  back  and  asked  If  X  would  cal 

«y  to  him  that 

th«r«  would  be  someone  representing  the  contras  to  90  by  his 
office  and  who  would  tell  him  how  to  provide  the  funds.   He 
may  conceivably  have  given  me  a  name.   If  he  did,  I  don't 
have  any  recollection  of  it. 

He  might  have.  He  may  not  have.   I  don't  know. 
He  just  said  someone  would  in  the  next  couple  of  days.   Then 
^^^H^^Htold  me  that  that  had  taken  place. 

Now,  that  is  all  I  know.   I  don't  know  whether  the 
funds  actually  got  anywhere  or  what.   I  don't  know  anything 
about  it. 

To  pursue  that,  there  was  a  period  of  time  that 
passed  when  Ollie  came  to  me  again  and  spoke  of  the  desparate 
need  of  the  contras  and  whether^^^^Hcould  do  anything 
further  financially  and  I  called^^^^Bmentioned  it  to  him, 
he  said  he  would  check,  he  came  bxdk  and  said,  yes,  and  I 
told  Ollie  and  that  is  I  think  the  last  Z  heard  of  it.   But 
my  understanding  is  something  was  done  further. 
Q    On  the  second  occasion. 
A    On  the  second  occasion. 

Another  million. 
0    Let  me  take  you  back  through  thie  and  ask  you 
some  other  sort  of  detailed  questions.   First,  what  date 
was  it  that  you  thought  the  meeting  was  in  August  —  let  me 
ask  you  this  way  —  your  calendar  reflects  a  meeting  in 























~fJl~i\^l\Lj  1 

August  1984  wlth^^^^^^l  You  thought  it  v»b  c 
Saturday.  I  didn't  g«t  down  to  th«  exact  date  th£ 
calendar  reflected  that  meeting  taking  place. 

A    August^^H  But  that  seems  to  early.   I  can't  — 
it  is  hard  for  me  to  think  —  I  used  to  meet^^^H  you 
understand,  about  once  every  couple  months  either  in  his  home 
or  at  his  home  or  at  a  restaurant.  We  used  to  get  together 
and  talk  about  our  relationships. 

Q    Okay. 

A    So  that  was  fairly  standard  procedure  to  meet, 
but  I  don't  have  any  other  breakfast  as  such  written  down  in 
1985.   I  am  pretty  sure  it  was  a  breakfast.   And  I  am  pretty 
sure  it  was  a  Saturday. 

Q    And  August  18,  1984,  is  a  Saturday. 

A    That  is  the  only  one  I  have  written  down.   But 
that  doesn't  mean  it  didn't  happen  in  1985,  you  see  what  I 
aa  saying.   Z  just  want  you  to  be  sure  I  am  not  saying  that 
that  was  it. 

It  may  have  been  and  it  may  not- have  been. 

0    All  right.   Let  me  ask  yoa,  at  the  time  let's  just 
assume,  although  I  understand  you  are  not  saying  it  was  around 
August  1984  that  this  meeting  took  place  — 

uNiii  Ad^ii^'t>^i3    TOr  CCCRCT 


Jl  Uf '"  OIjOIVCi 







A    It  could  hav«  b««n  August  1985  i«  what  I  am  ««ylng. 
0    But  let'i  say  a»  of  August  1984  did  you  know  that  — 
I  hav«  Colonel  North's  calendars  so  I  was  looking  just  to  check 
some  stuff  and  we  will  take  a  look. 

A    Fine. 

Q    Did  you  know  that  at  that  time,  as  of  August  or 
so  of  1984,  that  the  contras  was  one  of  the  areas  that  was 
within  ~  I  guess  it  is  called  an  account  or  one  of 
Ollie  North's  accounts? 

A    I  didn't  know  specifically  what  Ollie  did.   I 
assumed  —  there  was  no  doubt  that  he  dealt  with  the 
contras  and  with  Central  America.  No  question  about  that. 
But  how  much  it  was  his  account,  I  didn't  know  that.   I 
really  didn't  know  what  he  was  doing. 

Q    All  right. 

A    I  really  didn't. 

Q    Did  you  have  much  previous  --  prior  to  these 
events  that  you  will  tell  us  about  and  have  told  us  about  — 
did  you  have  much  previous  contact  with  Colonel  North? 

A    Bardly  any. 

Q    He  did  not  come  within  East  Asian  areas  at  all? 

A    Oh,  no,  no.  If  he  did,  not  with  me. 

Q    Hot  with  you,  okay.  You  said  as  you  went 
through  this  that  the  first  thing  that  happened 

Iwea  that  Colonel  North  came  to  you 


i<jr  OJ 



and  asked  you. 
A    Yes. 

Q    Did  he  come  to  you  in  person  or  on  the  phone? 

A    In  person.   He  talked  to  me  in  person. 

Q    Was  anybody  with  him? 

A    NO.  He  was  by  himself. 

Q    This  was  at  —  let  roe  help  the  time  out  a 
little  bit.   It  seems  to  me  at  one  time  you  be  able  to 
remember  is  the  October  1984,  whether  or  not  you  were  --  in 
October  1984  is  when  you  ceased  being  a  regular  NSC   employee 
and  also  have  your  George  Washington  duties. 

DO  you  think  this  took  place  in  that  period  of 
time  that  you  had  already  gone  back? 

A    I  can't  say.   As  I  say,  initially  I  thought  it^ook 

place  in  1985. 

Q    Right.   -...- 
-..   &..-  That  was  my  initial  thinking  until  I  saw  that  thing 
on  the  book.   I  thought  all  of  this  took  place  in  1985. 
Q    Right. 

A    Until  I  looked  at  my  calendar,  then  I  got 
slightly  confused  when  I  saw  this.   That  is  if  only  thing 
because  I  thought  it  w..  1985.   That  certainly  was  the  way 
my  thinking  was.   It  was  1985. 

Q    was  it  just  the  two  of  you  in  the  office? 

A    1  am  not  sure  it  was  in  the  office.   It  could  have 












b««n  anyvh«r«  ovar  thara. 

Q         In  tha  NSC? 

A    It  could  hava  baen  anyvhara,  but  it  was  just  tha 
two  of  us.   I  aa  pretty  sura  thara  was  nobody  alsa  there. 

Q    Ha  didn't  bring  anyone  with  hin  and  you  didn't 
hava  one  of  these  two  guys  with  you? 

A    No.   There  was  nobody  there.   To  the  best  of  my 
recollection,  it  was  just  the  two  of  us  when  he  said  he  and 
Bud  McFarlane  had  these  discussions  and  they  wanted  to  know  if 
Z  would  speak  with^^^Kabout  it.  That  was  it. 

Q    I  know  that  you  indicated  ha  told  you  about  the 
situation  that  the  contras  were  in,  they  had  run  out  of  money. 

A    He  gave  a  very  strong  case  about  how  terrible  their 
situation  was. 

Q    Did  ha  tell  you  what  the  money  would  be  used  for? 

A    No.   Basically  I  got  tha~idaa  that  it  would  be, 
again,  humanitarian,  ha  talked  about  the  terrible  shape  they 
were  in,  all  tha  things  they  needed,  medicine,  there  was  no 
madlcina.  Everything. 

Ha  want  into  a  long,  long  story  alout  tha  situation, 
you  know,  and  how  terrible  it  was.  Not  specifically, 
though,  no. 

Q    How  long  did  you  talk  to  him? 

I  know  I  am  asking  you  about  things  that  happened 
a  long  time  ago. 

i^^LAS$a"^p  SECRET 


■■I « J  -..-■ 

'u  :t--  %/  5  ii 











A    I  don't  think  it  lasttd  longer  than  fiv«  minutes. 
But  I  don't  know.   Five  or  ten  minutes,  maybe. 

0    I  take  it  at  this  time  you  kne( 
fairly  well. 

A    Oh,  I  have  known^^^Hfor  a  long  while. 

~0    And  do  you  have  any  recollection,  how  did  you  get  in 
touch  wit^^^^^H  just  call  him  up? 

A    I  called  him  up  on  the  phone,  I  think. 

Q    How  long  was  that  after  this  encounter  with 
Colonel  North. 

A    It  is  hard  for  me  to  say.   I  would  guess  it 
wasn't  that  long.   A  couple  weeks  maybe. 

Q    Okay. 

A    Something  like  that. 

0    Did  you  have  the  sense  from  Colonel  North  in  his 
discussions  with  you  that  it  was  an  emergency  situation? 

A    Oh*  sure.   No  question.   He  presented  it  in  that  way 

0    Did  he  give  you  any  indication  of  how  much  money 
he  was  hop/ing  that^^^^^<rould  be  willing  to  give? 

A    As  much  as  possible,  I  think,  is  the  way  he  put  it 
and  he  was  talking  about  several  million,  I  think. 

Q  Is  that  right,  your  impression  was  — 









A    Hy  Impression,  was,  y«s,  Z  can't  r«iMinb«r  exactly. 
But  h«  was  talking  about  as  much  as  possible. 

Q    Was  th«  m««tln9  witt^^^Bthen  scheduled 
specifically  to  discuss  this? 

A    That  was  my  intent,  yes.  Though  I  think  we  talked 
about  other  things,  other  possible  relationships,  but  the 
meeting  was  basically  for  this  purpose. 

Q    Did  — 

A    No  one  else  was  there. 

Q    Where  did  the  breakfast  meeting  take  place? 

A    In  his  home. 

Q    In  his  home? 

A    Yes. 

Q    Has  anyone  there  during  the  breakfast? 

A    NO. 

Q    Just  the  two  of  you? 

A    Right. 

Q    But  during  the  course  of  that,  how  did  you  relay 
the  request?  Did  you  relay  it  as  having  come  from 
Colonel  North  and  McFarlane  or  from  the  O.S.  Government, 
maybe  if  you  could  flesh  that  out. 

A    I  can't  remember  basically  how  r  put  it,  but  I 
certainly  put  it  in  terms  of  coming  from  McFarlane,  I  mean, 
the  National  Security  Advisor,  no  question  about  that.   That 
is  the  way  I  put  it. 























.  -.1  ;;pQT-"-"AUl'  OJLlwAMji 

Q    What  ~  do  you  know  what  you  told  him  the  monay 
would  b«  us«d  for? 

A    No.   As  I  recall,  I  told  him  the  great  need  that 
they  had  told  me  about  and  so  forth.   I  am  not  sure  that  I 
ever  specifically  said,  other  than  I  told  him  of  the  need 
and  the  things  that  they  have  to  have. 

Q    Old  you  tell  him  ~  did  you  ask  for  a  specific 
amount  of  money? 

A    No,  I  don't  think  I  did.   I  think  I  talked  --  no, 
in  fact,  I  am  pretty  sure  there  was  no  specific  amount  of 
money . 

Q    Was  there  any  discussion  about  the  amount  of  money 
they  might  want  to  give  or  not  give  during  that  time? 

A    NO,  I  don't  believe.   To  the  best  of  my  recollection 
I  don't  think  he  said  anything  about  that.   I  think  the  first 
time  he  said  anything  about  money  .was  when  he  came  back  and 
said  they  could  provide  a  million  dollars.   I  don't  think 
he  said  earlier. 

Q    Nh«n  you  first  talked  to  Colonel  North  about  this 
did  you  have  any  discussion  with  him  or  qualms  about  whether 
or  not  there  was  —  donating  money  by  third  countries  was 
legal  or  illegal? 

A    I  asked  hin. 

Q    You  did? 

A    Yes,  I  said,  are  you  sure  everything  you  are  going 
























to  do  here  is  legal?  He  said,  oh,  yes. 

Q    Did  you  get  any  sense  of  how  he  knew  it  was  legal? 
A    He  said  they  had  checked  it  out  with  lawyers. 
Q    Did  he  tell  you  what  lawyers? 
A     No. 

Q    Did  you  have  the  impression  it  was  the  White  House 
Counsel's  Office? 

A    I  had  no  impression  at  all.   I  really  didn't  think 
about  it  one  way  or  the  other. 

MR.  BERRY:   What  was  the  policy  at  that  time  at  the 
NSC,  especially  when  you  came  into  a  grey  area  where  you 
thought  you  should  at  least  check  with  legal  counsel,  was  the 
policy  to  check  with  NSC  legal  counsel  or  what  was  the 
stated  policy  of  the  NSC? 

THE  WITNESS:   I  can't  answer  that  because  I  don't 
know  what  that  was.   Z  have  no  idei. 

MR.  BERRY:   There  was  no  enunication  of  a  policy 
then  that  you  can  recollection? 

THE  WITNESS:   Not  as  far  as  I  knew. 
MR.  BERRY:   When  Mr.  McFarlane  indicated  to  you, 
you  cane  back  to  — 

MR.  BGGLESTON:   Could  we  wait  until  I  get  to 

MR.  BERRY:   Sorry. 

MR.  EGGLESTON:   Otherwise  we  will  have  a  problem. 






























Do  you  hav*  anythin?  els*  about  what  w«  hav«  now? 
MX.  BERRY:  Just  the  l«9al  question. 

0    Okay.   Old  you  talk  to  anybody  else  other 
than  Colonel  North  about  whether  or  not  there  might  have  been 
a  legal  problem? 

A    No. 

Q    During  this  course  prior  to  talking  t 
the  first  time,  did  you  talk  to  anyone  at  the  State 
Department  or  anybody  else  about  this? 

A     NO. 

Q    Did  Colonel  North  ask  you  not  to  or  was  there  any 
reason  not  to? 

A    Not  specifically.   I  don't  think  he  specifically 
asked  me  not  to,  I  just  didn't. 

Q    Okay.   1  am  curious  that"it  is  a  contact  between 
the        States  Governnent  and^^^^^^^^^^^^^^^^^H 
involving  asking  for  money  to  be  provided  at  the  United 
States  Govemawnt's  request.   Is  that  something  that  you  would 
have  normally  brought  the  State  Department  in  on  or  is  that 
the  kind  of  thing  — 

A    I  never  thought  about  it  one  way  or  the  other.   I 
thought  this  was  a  request  from  McFarlane.   He  was  my  boss  and 
I  did  what  he  asked  me  to  do.   It  was  as  simple  as  that.  My 
assumption  was  that  this  was  agreed  upon  policy. 

MJSSjk^Ei^r  occmjT 


















0    Okay. 

A    Z  was  not  doing  something  that  othsr  people  —  after 
all.  McFarlane  was  in  daily  contact  with  Shultz  and 
Weinberger  and  Casey.   I  assumed  that  these  things  were  -- 
Q    Right. 

A    —  were  done.   I  didn't  have  any  reason  to  question 
that.   Why  should  I  think  that  there  might  have  been 
something  else? 

I  was  asked  to  do  it.   I  did  it. 
Right.   Did  you  prior  to  the  time  you  spoke  to 
did  you  discuss  it  with  McFarlane  at  all? 
A    Not  prior.   It  was  after  I  talked.   I  had  no  reason 
to  doubt  Ollie  at  all.   I  didn't  question  him  for  a  minute 
and  obviously  when  I  spoke  to  McFarlane  there  was  no  reason 
for  me  to  have  done  so  because  it  was  right,  I  was 
correct.   Everybody  knew, at  least  t   thought,  that  on  matters 
involving  this  area  Ollie  spoke  for  McFarlane.   There  was 
never  any  question  about  that. 

Q    By  "this  area",  you  mean  the  area  of  the  contras? 
A    Central  America,  yes. 

21  Q    So  you  regarded  Ollie  as  clearly  having  authority 

22  to  do  this? 

23  A    Not  a  shadow  of  doubt. 

24  Q    To  do  this  thing. 

25  A         No  doubt. 

urn-    n  .'-^  If*  r  ?• " '  '  n^ 

ItMo L ;a^j8c«pr>p  }SE^PFT 






0    W«  h«v«  covered  that  breakfait  th«n.  A{t«r  th« 
breakfast,  you  come  back  and  you  •••  McFarlane  at  that  tiin«? 

A    y«fl. 

0    Do  you  recall  where  you  saw  him? 

A    In  his  office. 

0    Was  Colonel  North  present? 

A    No. 

Q    Just  the  two  of  you? 

A    Yes. 

0    And  I  take  it  —  what  was  the  conversation  then? 
You  told  us  — 

A    Simply  Z  told  him  that  I  had  had  —  it  was  a  very 
short  conversation.   There  was  no  more  than  a  few  minutes. 
I  told  him  in  accordance  with  the  conversation  I  had  with 
Ollie  and  the  request  he  and  Ollie  had  put  to  me,  Z  said  I  had 
breakfast  with^^^H talked  with  him  about  it.  He  said  they 
might  be  able  to  help  but  they  would  have  to  do  it  through  the 
U.S.  GoverniMnt. 

And  McFarlane  said  that  is  not  possible.   Zt  can't 
b«  done  that  way. 

Q    Did  he  indicate  to  you  why  it  couldn't  be  done  that 

A    No. 

0    Old  you  have  any  understanding  why  it  could  not  be 
done  that  way? 

^' '  ^oE°*^^p  nrcnDT 






























lAJl^  i2)i=i01U,ii — 

I  thought  there  was  probably  something  wrong  with 




But  you  didn't  have  any  specifics  on  why  it  was 

I  didn't  have  anything  specific,  no. 
By  doing  it  through  the  U.S.  Government,  I  take  it 
you  understood^^^^^Bwould  — 

A    They  would  give  the  money  to  the  U.S.  Government, 
that  is  right.   My  assumption,  you  see,  it  is  interesting, 
rather  than  me  bringing  it  down  like  that,  rather  than  me 
thinking  it  was  necessarily  anything  illegal  about  it. 

I  didn't  see  it  in  other  terms.   I  saw  it  in 
those  terms  perhaps.  You  know,  this  is  the  way  I  looked 
at  it. 

Did  Mr.  McFalrane  indicate  to  you  how  it  could  be 

JBOti  <?3SjGfSff- 




























A    No.   But  as  I  say.  when  Z  talked  later  with 
Ollie  saying  about  how  he  wanted  to  do  something  about 
introduci(tg  hira  to  the  contras,  I  assumed  that  is  the  way  he 
and  Bud  had  decided  on  it,  to  try  it  that  way.   See  whether 
that  was  possible. 

Q    To  do  it  direct? 
A    Do  it  direct. 

Q    As  of  the  time  you  spoke  then  to  Ollie,  was  that  a 
conversation  you  had  after  you  talked  to  McFarlane? 
A    Yes  —  about  the  contras? 

Yes,  oh,  yes. 

Did  Ollie  already  know  what  you  had  said? 
No,  I  told  hiffl  what  I  had  said. 
I  wonder  if  you  had  an  Indication  that  McFarlane 
had  told  Ollie  that? 

A    Z  don't  know,  it  is  possible  he  might  have.   I  told 
hia  in  any  event  what  McFarlane  said  to  me.   I  can't  recall 
how  he  reacted.   I  mean,  whether  he  may  have  known.   It  is 
possible.   He  may  have  spoken  to  McFarlane.   Yes.   Sure. 
I  don't  know. 

Q    You  told  Colonel  North  that  it  was  not  possible  the 
way^^^H wanted  to  do  it  according  to  McFarlane,  what  was 
Colonel  North's  reaction?  What  did  he  say? 

NGlI^;),,  .(:l^     top  secret 





■A  V^r  "Ul-iV^IVLj  1 








A    I  don't  know  that  h«  said  anything  at  the  tlm«.   i 
think  h«  sort  of  shrugged.   It  was  later,  I  believe  that  he  - 
again,  as  I  say,  it  was  a  little  later  when  he  came  to  me  about 
wanting  to  meet  with^^^^^^Hmade  comments  about  introducing 
somebody  in  that  outfit  to  the  contra  leadership. 

Q    Did  the  discussion  with  McFarlane  or  where 

McFarlane  said  you  can't  do  it  that  way,  did  that  prompt  you 
to  ask  Colonel  North  about  this,  is  this  okay,  is  this  all 
right,  is  it  legal? 

A    No.   I  thought,  frankly,  that  was  the  end  of  it  right 
there.   Z  didn't  think  anything  would  proceed  from  there. 

Q    All  right. 

A    I  had  done  what  they  asked  me  to  do.   I  did  it. 
That  was  that.   But  he  came  back  again. 

Q    Then  I  take  it  Ollie  came  back.   I  think  the  first 
time  you  told  us, at  least  to  me,  you  indicated  he  called  you. 
Do  you  have  a  recollection  he  called  you  on  the  phone  as 
opposed  to  meeting  with  you? 

A    Z  can't  remember.   He  might  have  called  me  on  the 
phone . 

Q    Z  know  this  was  the  occasion  where  you  started  to 
wonder  about  just  what  the  timing  was.   Do  you  have  any 
recollection  about  a  year,  that  is  a  long  time? 

A    The  only  —  I  know,  a  year  seems  an  awfully  long 
time,  and  Z  can't  believe  it  was  that  long.   Therefore, 


TOP  SEcnrT 


.  I '  -'^  ■ 

-txjt  ;jLiOiu-i 



























I  think  it  was  in  198S  because  I  do  know  when  he  came  back  to 
me  for  the  second  amount,  when  he  asked  again  if  they  could 
help  further,  and  I  checked  with^^^fon  that,  that 
took  place  in  October  of  198S.   I  know  that  because  there 
is  a  recollection  that  I  have  of  someone  who  was  in  my 

I  didn't  talk  with  him  about  this.   I  simply  — 
what  I  am  saying  I  recollect  the  two  things  together. 
Therefore,  I  know  it,  it  is  in  my  mind  as  being  October. 

Q    Let  me  just  probe  your  recollection. 

A    Of  1985. 

Q    Just  to  probe  your  recollection  of  these  events, 
was  it  a  longer  period  of  time  between  —  it  %«}uld  strike  me 
it  would  be  a  fairly  short  p/eriod  of  time  between  your  first 
contact  with^^^H  about  this  and  the  time  Ollie  comes  back 
and  a  longer  period  of  time  before  he  wants  you  to  go  back  to 
them  again. 

A    I  don't  think  it  was  all  that  long.   I  don't  think 
it  was  all  that  long.  My  thinking  would  have  been  three 
months,  four  months,  something  like  that.  '  But  if  that  thinkinc 
of  August  1984  is  correct,  then  we  are  talking  about  a  year. 

0    Right. 

A    Which  is  not  impossible,  I  guess.   I  have  got  to  — 


U  i^  vj 



but  it  just  strikes  m«  as  difficult  to  see  it  that  way. 
0    To  think  it  was  that  much  time? 

A    TO  think  it  was  that  much  time.   But  I  can't  swear 
to  that.   I  Just  have  trouble  on  that  business  of  trying  to 
accept  those  times. 

Q    When  Ollie  called  you,  in  any  event,  putting  aside 
when  it  might  have  taken  place,  when  Ollie  called  you  again  and 
said  he  wanted  to  meet  withal  take  it  at  that  time 
you  know  that  it  is  again  about  the  contras  and  solicitation 
of  money  from  a  third  country. 
A    Sure. 

Did  you  ask  him  what  happened? 
No,  I  did  not. 

Was  that  just  a  brief  conversation? 
I  don't  know  how  long  they  met. 
I  am  sorry.   I  mean,  thi  conversation  about 
setting  up  the  meeting  with  North? 

A    Oh,  that  was  just  nothing  more  than  a  minute  and 
asking  me  to  set  it  up,  that  was  all. 

Q    And  so  then  you  do  set  up  the  meeting  with 
two  of  them  at  the  Hay  Adam,  and  then  after  the  introduction 
I  take  it,  you  left? 
A    I  laft. 

Q    YOU  simply  disappeared?  You  indicated  before  that 
you  had  «  date  of  August  2,  1985,  in  your  calendar. 




























Wi-iV^XVljl  ^ 



*^  >;-j  u  2  vV  Kif  St 

A    I  havt  that  do%ni  hera  aa  tha  Hay  Adaaa  te%.     But 
X  had  tea  at  Hay  Adant  on  nwunarous  occasions  so  it  doesn't  have 
to  be  that.   I  will  tell  you  the  only  reason  I  wrote  that  down 
as  being  important  is  because  it  ties  in  with  the 
conversation  I  have  listed  on  my  calendar  as  I  having  had  with 
the^^^^^^^^^^^^^^^^^^^^^^^^^H  It  is 
possible  those  two  things  were  togetherabou^this. 

In  other  words,  it  fits  in  timing,  but  I  can't  —  I 
could  be  wrong  about  that.   It  may  not  be  that.   It  could  be 
another  date  involved  there. 

Q    But  just  to  finish  our  the  rest  of  this  story,  so 
you  leave  and  there  comes  a  tine  then  when  you  hear  back  from 
A    Yes. 

Is  that  right? 
That  is  right. 

How  do  you  hear  back  from  him? 

I  can't  remember.   X  think  he  called  me  or  said  to 
me  at  a  lunch  or  dinner  or  something,  I  can't  recall. 
Q    What  did  he  tell  you? 

That  they  were  going  to  assist. 

Did  he  tell  you  how  much?      > 

A  million  dollars. 

Did  you  have  any  discussion  by  this  time  with' 

about  how  the  money  was  going  to  get  from  them  to  the  contras? 











rtKji  otj^d^u 




0    Did  h«  ask  you  about  what  his  next  step  should  be? 
A    I  can't  remember  whether  he  ever  asked  me  that  or 
not.   I  don't  think  he  asked  me  specifically.   I  told  Ollie 
about  it,  you  know,  that  he  had  said  that  they  could  assist. 
Ollie  said  he  would  make  the  arrangements  or  something  like 
that.   For  it  to  be  done,  you  know.   I  don't  know  if  there 
was  anything  further  that  took  place  between^^^Huntil  the 
next  time. 

Q    And  thereafter  as  far  as  you  know.  Colonel  North 
took  care  of  the  arrangements  of  actually  getting  the  contras 
and  ^^^^^^^^^H  together? 

A    That  is  right.   I  know  absolutely  nothing  about  that 
He  said  nothing  to  me  about  it  and^^^^^^^H  said  nothing  to 
me  about  it. 

I  have  no  idea. 

Q    Okay.  Then  there  comes  a  tine  when  Colonel  North 
comes  back  to  you  again. 

A    For  more  money. 

Q    Saying  they  need  more  money. 

A    Right. 

Q    Do  you  remember  anything  more  about  the 
logistics  of  that? 

A     No. 

Q    Did  he  come  to  you  in  your  office  or  a  phone  call?   i 

"^^-'^^    TOP  QECRET 










iXJV  iSiLiUlCL,! 


A    No,  no.   X  don't  rtmenbcr  that.   It  could  h«v«  b«cn 
X  think  it  was  probably  —  remember  now,  I  saw  him  almost 
every  day  at  that  senior  staff  meeting. 

Q    Right. 

A    It  could  have  been  after  that.   It  could  have  been, 
you  Icnow,  when  he  said  something  to  me.   That  is  possible. 

Q    You  indicated  before,  I  think,  and  X  am  just 
recollecting  this,  you  placed  this  around  the  time  of 
October  198S  because  of  the  ambassador  — > 

A    The  second  go-around. 

Q    Was  it  the  day  of  the  second  go-around? 

A    I  am  not  sure  of  the  date.  That  I  can't  tell  you. 
But  I  recall  it  being  around  that  time  because  I  had  —  North 
had  talked  to  me  about  it.   I  recall  and  I  was  seeing  our 
ambassador  designate  and  the  two  things  stuck  somehow  in 
my  mind.   They  happened  together. 

Q    Right.   So  you  are  able  to  place  that? 

A    That  is  why  I  am  able  to  place  that  in  October, 
which  I  think  is  pretty  accurate  as  far  as  I  remember.   I  mean 
it  was  October,  maybe  late  October,  but  somewhere  in  there. 
Somewhere  in  there. 

Q    Did  you  contact^^^Bagain  then?' 

A    Yes.   I  did. 

Q    And  what  happened?  What  did  you  tel 
We  need  more  money? 



Pd  2 



























A    That  if  what  X  told  him.   I  talked  to  01li«,  oilla 
tells  me  that  they  are  again  desperate ,^^^| said  i  will 
see  what  I  can  do. 

Q    Then  you  are  out  of  it? 

A    Then  I  am  out  of  it. 

0    So  you  don't  know  what  happened? 

A     No. 

Q    Did  you  get  the  impression  from| 
meetings  that  more  money  had  been  sent? 

A    Oh,  yes,  he  told  me  so. 

0    Did  he  tell  you  how  much? 

A    He  said  another  million. 

Q    Other  than  those  two  occasions,  did  Colonel  North 
ever  approach  you  about  getting  any  other  money  from  I 

in  later 

A     No. 

Q    There  comes  a  time  in  the  summer  of  1986  where  the 
contras  end  up  pretty  hurting  for  money  between  the  time  that 
the  NHAO  money  runs  out  and  further  congressional  money 
that  has  been  appropriated  is  availabre  to  them.   Did  he 
approach  you  at  that  time? 

A    I  don't  recall  that. 

Q    You  don't  think  so? 

A    No,  I  don't  think  so. 























^  .  .  "J  'W  a  d    llmtj 

^*  Si/X — fciTfcj  v/Atfcr* — - 


0  Just  one  question,  If  I  could,  or  a  couple. 
Old  North  ever  describe  the  type  of  assistance 

which  he  wanted  to  solicit  frorai 

A    My  understanding  was  we  were  talking 
fundamentally  about  humanitarian  stuff.   That  is,  he  talked 
about  medicines,  food,  clothing.   They  needed  everything, 
obviously.   I  mean,  there  was  no  question. 

Q    Ha  never  used  the  magic  phrases  such  as 
humanitarian  only  and  not  lethal? 

A    I  don't  know  as  he  ever  said  that  to  ma,  but  I 
can't  remember  that.  Not  in  that  sense.   It  is  possible.   But 
I  don't  know. 

1  don't  recall.   It  was  clear  that  they  needed  everything 
they  could  have.   Everything  theycould  get,  but  he  talked 
about,  as  I  say,  about  medicines,  he  talked  about  that,  yes. 

Q    You  got  the  impression  that  it  is  basically 
fungible  •••istanca,  that  is,  dollars  or  monies,  so  that  — 

A    Yes.   No  question  that  ha  was  asking  for  money. 

Q    Okay.   Did  Mr.  North  ever  —  Colonel  North  ever 
at  any  tima  request  that  you  keep  your  t*lks  wit! 
compartmantalizad,  that  you  never  discuss  it  with  anyone 

A    I  don't  think  so.   I  didn't,  but  I  don't  think  he 
























r  "  »  •  -^  ^ 

%-tm^    ^ 

ever  asked  that. 

0    Oid^^^^^^l  ever  indicate  to  you^hat  he  was  ever 
contacted  by  any  other  U.S.  Government  agency  or  official 
about  this  issue? 

A    No. 

Q    Do  you  know  if  Ollie  North  ever  indicated  that  he 
contacted  any  other  U.S.  Government  agency  about 

A    He  never  said  anything  about  any  other  U.S. 
Government  agency.   It  was  never  mentioned. 

0    As  far  as  you  knew,  you  were  the  only  contact  with 
U.S.  Government  was  having  withj 

A    That  is  right. 

Q    Okay. 


0    Just  a  few  questions. 

After  each  Incident  with  regard  t^^^^^^  you 
said  earlier  tha^^^^^^^H  con  firmed  after  the  fact,  the 
fact  that  it  had  gone  through  successfully. 

A    Yes. 

Q    Is  that  right? 

A    Yea,  or  they  had  provided  it,  however  they  did  it. 

Q  Is  it  also  tr\i«  that  Colonel  North  also  advised 
you  after  the  fact  on  each  occasion  that,  in  fact,  it  had 
gone  through? 

>i^i)i.iL5LD   40?  SECRET 



^^*  %^ma 



A    Yei,  I  think  that  is  right.  I  think  he  did. 

Q    Did  h«  give  you  anymore  details  when  he  told  you 
that  things  had  taken  place  succe9afully>  did  he  tell  you 
what  had  been  done  or  anything  like  that? 

A    Not  a  peep. 

0    On  each  occasion  your  understanding  was  the  donation 
was  $1  million  in  cash  on  each  occasion? 

A    I  guess  so. 

0    That  was  the  impression  you  had? 

A    That  was  the  impression.   It  was  $1  million.  Now,  you 
know,  that  was  my  understanding.   That  is  righ_t 

Q    He  didn't  react  one  way  or  the  other,  adversely  or 
A    He  didn't  react.   I  don't  think  he  said  anything. 
He  just  kind  of  brushed  it  off.   It  was  nothing,  he  said  to 





l±\Jr    OJLiKjlS.£J^ — r 

0    Can  you  put  any  time  frame  on  that  mention  by 

A    I  think  it  would  be  1985,  sometime,  but  it  is  hard 
for  me  to  put  it  when.  Probably  somewhere  irpetween  the 
time  of  the  first  amount  and  the  second  amount,  probably, 
but  I  can't  -- 

MR.  EGGLESTON:   Whenever  that  happened. 
THE  WITNESS:  Whenever  those  happened,  right.   It 
is  hard  for  me. 

Q    It  is  down  that  black  hole  somewhere. 
A     It  is  down  that  black  hole  somewhere  and  I  can't 
remember  it. 

Q    All  right.  That  is  all  I  have. 

Q    I  have  just  one  more  on  this  and  I  will  go  on.   I 
indicated  you  had  one  conversation  about  this  general  area  of 

ind  solicitation  with  Mr.  McFarlane,  did  you  have  any 
other  conversations  with  hia? 

A    No.   That  was  all.  Just  that  one. 
Q    Just  that  one? 

A    I  never  spoke  to  hi*  again.  My  assumption  was 
quite  clear,  that  Ollie  North  represented  Bud  in  this  case  and 
there  was  no  reason  for  thinking  otherwise. 









M  i«  *   ■■■-«'\i/^rvx^A 


0    Let  iM  go  on  to^^^^^^Hknd  I  think  it  might 
maXa  fens*  to  follow  the  same  format  which  is  I  win  ask  you 
to  remember  whatever  you  do  remember  and  go  back  and  ask  you 
to.   Why  don't  you  launch  in? 

A    Ollie  asked  me  and,  again,  it  is  probably  sometime 
in  the  summer  of  198S,  again,  talking  about  the  needs  and 
so  forth,  in  Central  America.   It  was  broad,  Central  America, 
contras,  but  Central  America.   And  if  I  knew  anyone  at  the 

whom  he  could  talk  to.   I  don't  think,  as  I 
remember  it,  that  he  said  anything  to  me  about  necessarily 

trying  to  get  money  from  them.   He  wanted  to  talk  to  them 
about  the  Central  America  situation  and  the  contras.   I  said, 
yes,  I  knew  a  man  over  there  that  he  might  talk 

Ha  has  a^^^^Hbackgr(?und.  Ollie  asked  me  if  I 
would  call  hia  and  try  to  set  up  something  with  him.   I  said 
I  would  call  hia.   So  Z  called  ^^^^^^|and  I  think  he 
caa*  by  to  see  ma.   W*  had  some  other  things  to  talk  about. 

As  I  recall,  he  cam*  by  to  see  m*  and  I  mentioned  tha 
Colonel  North  wanted  to  talk  with  hia  and  talk  to  him  about 
Central  America.   H*  said  h*  would  b*  quit*  happy  to.   I  told 
Olli*  that.   I  gav*  hia  hi*  nunb*r  and  1  never  heard  another 

thing  about  it. 

That  was  th*  end  of  that.   I  have  no  idea  whether 














^iKjr  otn\^i\±ii 

thay  «ver  met  or  whether  they  did  eny thing. 

Is  ^^^^^^^H 
A    I  think  BO,   yes. 
0    Do  you  remember  his  first  name? 
A    No. 

Q    Did  you  know  him  well? 

A    No,  I  just  knew  who  he  was.   I  had  met  him 

once  or  twice. 

0    Did  you  know  what  his  position  was? 
A    Yes, I 


is  very  close  to 
I  That  job  always  has  that  to  it. 
Sort  of  a  personal  representative.  That  is  why  I  thought  if  he 
wanted  to  talk  to  hin  «ibout  Centr'%1  America,  that  was  probably 
the  guy  to  talk  to. 

Q    Is  this  the  only  tine  that  —  I  better  not  ask  that-- 
can  you  place  this  conversation  with  Colonel  North  and  these 
events  with  Colonel  North  at  all  in  a  tine  continuum? 

A    The  only  thing  I  can  say  is  Z  have  on  my  record 
that  I  met  witl^^^^^^^^Bin  my  of f ice  >on  August  2,    198S. 
That  is  probably  it. 

Probably.   I  can't  swear  to  that  because  I  met 
him  a  couple  times.   But  that  is  probably  it. 



iji'i  ;^M'^'Jji'.c.U 















i4f  kjrjL    UQOl\jLr 


Q    So  that  if  th«  date  that  you  would  have  met  with 

^^^     Colonel  -^ 

0  ^^^^^^^^^sorry,  after  Colonel  North  had  asked 
you  to  set  up  some  sort  of  meeting? 

A    Well,  I  didn't  really  set  up  a  meeting.   All  i 
did  was  say  that  North  wanted  to  talk  with  him  and  I  gave  him 
North's  telephone  number  and  he  could  call  him  himself. 
0    So  unlike  the  meeting  — 
A    I  did  not  set  a  meeting  up,  no. 
Q    This  is  nothing  you  have  ever  seen  before,  so  I 
am  not  going  to  ask  you  to  identify  it,  but  Z  have  Colonel 
North's  calendar  for  this  week,  and  it  is  the  week  ending 
August  4  and  on  Friday,  August  2,  whicl»  is  the  same  day  that 
you  have  recorded.  Colonel  North  ha 
Gaston  Sigur;  and  later,  2:15,  it 'looks  like  Gaston. 
A    Well,  I  — 

Q    I  am  not  suggesting  this  is  necessarily  right. 
A    I  don't  know  what  he  means  by  that  unless  he  means 
by  that  that  he  talked  to  me  about  it  there  and  I  called  him 
back  then  about  it  and  told  hia  what  this  guy  had  said,  because 
Z  never  met  with  those  two  together. 

0    That  i»  what  I  would  ask  you.  You  have  a  clear 
recollection  that  you  were  never  in  Colonel  North's  office  witt 
and  Ollie  North? 

^^c?j.-.^L'  JfOP-ffieRET 














*X  Vyi — UU\^XK£r 


A    That  li  absolutely  cl««r.  I  was  n«v«r  in  that  office 
witC^^^^^^^H  I  don't  Know  th«  ins  and  outs  of  this  thing. 

hav«  gona  down  to  his  office.   I  have  no  idea.  All 
I  Know  is. I  did  not  meet  with  those  two  together.   I  am  sure 
of  that. 

Q    Did  Colonel  North  give  you  the  same  sort  of  —  we 
went  through  this  —  the  same  sort  of  introductory  speech? 

A    Yes,  oh,  yes,  very  similar. 

Q    And  I  take  it  then  you  assumed  that  it  was  involved 
in  solicitation  of  money,  although  he  never  mentioned  that? 

A    He  never  mentioned  it.   It  was  probably  in  the  baclc 
■y  my  head,  but  all  he  said  is  he  wanted  to  talk  to  him 
about  Central  America  and  fill  him  in  on  what  was  going  on 
down  there.   This  was  basically  the  wa/  he  put  it  to  me.   But 
I  have  no  idea  how  he  talked  to  him, if  he  talked  to  him, 
and  what  he  said  to  him. 

Q    Did  you  ever  talk  to  Colonel  North  about  —  did 
he  ever  tell  you  that  he  had  a  nice  meeting  with^ 
or  a  terrible  meeting? 

A    No.   He  never  spoke  about  that^^^^Hconnection 

Q    Similarly,  I  take  it  then  you  never  spoke  tc 
Habout  whether  or  not  he  had  any  dealings  with  Colonel 

A    No.   No. 

^  ,'•-,  ■:  -:■  -, 


•wtifii-^r.ii'J  JSOBSEGSSf 


-lUl     Oi^OXVJji 



Q         So,  basically,  you  Juat  don't  know  how  that^^ory 


A  I  have  no  idea  what  happened. 

Q  Did  you  ever  discuss  that  at  all  with  Mr. 

A  No. 

Q  Or  anyone  else? 

A  No.   I  don't  think  I  talked  to  anybody  about  that 

Q  But  just  so  that  I  am  clear,  your  calendar  seems 
to  suggest  that  you  had  a  meeting  with 

A  On  the  second. 

Q  On  the  second. 

A  That  is  right. 

Q  YOU  probably  didn't  write  it -down,  do  you  know  what 

time  of  day? 

Does  your  calendar  indicate  what  time  the  meeting 


A    Let  me  see  if  I  can  get  the  time  of  day.   I  may  have 

the  time  of  day.  VOiat  did  1  say,  August  2? 

Q    Yes,  August  2. 

A    9:30  in  the  morning. 

Q    9 t 30  in  the  morning? 

A    Ye«. 

MR.  TRAYLOR:   9:30  it  says. 

THE  WITNESS:   9:30,  August  2. 

k3Sl?"^B   THP  ^r.ffT?rT 



,  "w*  C'  J  li'  t  II  iJ 



<h^iHC    ">ui-j<^^Avj-i  X 


Q    Can  you  tell  us  what  you  recall  about  that? 

A    The- only  thing  I  recall  is  Ollie  made  some  mention  ta 
me  —  I  think  it  was  at  one  of  the  staff  meetings  that 
there  was  a  ship  going  from  North  Korea,  if  I  remember  correctly 
about  this  —  I  didn't  pay  too  much  attention^o  it  —  to 
Nicaragua  and  they  were  trying 
to  stop  the  ship.   That  is  all  I  know 

0    And  you  think  that  was  just  »  single  conversation? 

A    I  am  pretty  sure  it  was  just  a  single  conversation. 
I  don't  know  he  said  anything  to  me  again.  As  far  as  I  recall 
It  is  not  impossible,  but  I  don't  remember. 


ship  — 

Did  he  tell  you  the  name  of  the  ship? 

I  think  he  did  at  the  tioM  but  J,   don't  remember  it. 

You  don't  recall  it.   If  I  mentioned  a  number  of  a 

If  I  saw  it  in  the  newspapers,  but  I  ddn't 



'"51  ~>  "I 









u  %J     -^    ••  •• 

ir  \jLj\^±\ij  I  - 


Q    You  don't  hav«  a  current  recollection? 

A    It  didn't  ring  «  bell  with  me.   It  didn't  really 
mean  anything. 

Q    But  your  best  recollection  was  it  a  single  shot 
item  where  — 

A    That  was  ny  recollection. 

Q    Did  he  ask  for  any  action  from  you? 

A    NO. 





















MR.  EGGLESTONi   Sttva,  did  you  hav«  anything  on  that? 

Q    Just  on*  question  on  th«  ship,  depending  on  the  tine 
frame  we  are  talking  about,  there  was^a  Newsweek  report] 

about  a  ship  from  North  Korea  carrying  arms  to  the 

Do  you  know  if  that  is  the  same  time  frame  or  the 
same  ship  that  — 

A    I  really  don't  know. 

Q    The  ship  Colonel  North  was  talking  about? 

A    As  I  say,  I  don't  recall  focusing  particularly  on 
that  ship  thing.   Re  mentioned  it  to  me.   I  didn't  pay  much 
attention  to  it.   I  heard  what  he  said  and,  that  was  that. 
I  didn't  focus  on  it  particularly. 




MR.  BERRY.   Thank  you. 

MR.  SMILJANICH:   I  hav«  no  questions.   Thank  you. 


w  go  on  t^^|^^^HH^H^H|^^^^^^^|^ 
I  think  th«  system  has  worked  well  up  to  now.  I  will  let 
you  do  the  sane  thing.  Let  ne  get  you  started  on  this  by 
asking  you  sooething. 

We  might  be  able  to  help  place  a  date  in  your  head 
which  may  or  may  not  help  you  out.   Did  you  have  more  than 
one  meeting  with(flHH|^^^^^^d  Colonel  North? 
A    NO. 

Q    At  the  Cosmos  Club? 
A    NO. 

Q    Where  is  the  Cosmo*  Club? 
A    2121  Mass  Avenue. 

0    I  will  tell  you  that  Colonel  North  has  on  his  calenda 
in  late  1984,  a  meeting  with  you  and^ 
Cosmos  at  —  at  2121  Mass  Ave.  ' 
~       A    That  is  what  1  got  here. 

)in  the 









Q         It  Is  Wednesday,  November  28,   1984 

A         That  Is  the  one,  yes. 

Q    With  Gaston  Slgur  an 

A    I  thought  it  was  June  19  when  I  looked  over  my 
calendar,  but  I  have  it  listed  November  28,  1984,  possibly 

at  Cosmos..^  I  can't  be  sure  about  that.   But  Z 
have  it  listed  here.   If  he  has  that,  then  that  is  it.   I 
would  accept  that. 

0    That  is  what  he  has. 

A    I  will  accept  that. 

Q    Obviously,  I  will  not  vouch  for  his  calendar  but  that 
is  at  least  the  one  he  has. 

A    I  would  think  that  is  right.   I  have  something  in  my 
book  written  here,  I  sort  of  scratched *it  through  and  put 
something  else  but  I  have  it  as  po8sibl)^H^^^^^^^H)at  the 
Cosmos  Club,.  November  28. 

Q    Now  that  we  have  a  start  — 

A    Then  that  is  right.   It  is  November  1984.   That  is 
the  time  it  was. 

Q    Does  that  help  you  place^^^^^^^^^A event 

A    Well,  I  thought  — 

Q    Assuming  that  is  November  1984.  ' 

A    Then  I  would  have  thought  ^^^^^^B  event  was  be  for 




1  A    That  is  my  thinking  th«t  it  was. 

2  Q    So  you  think  it  was  probably  August  1984? 

3  A    Could  very  well  have  been  because  it  has  as  I  said 

4  clearly  a  breakfast  on  Saturday  at  his  place  and  that  is  the 

5  week  I  had  it.   So  then  we  are  talking  about  a  long  period  of 

6  tine  that  passed  between  the  first  and  second.   That  is  what 

7  screwed  me  up,  I  think.   I  didn't  think  there  was  that  much 

8  time. 

9  But  that  fits  very  well.  That  fits  basically. 

10  Okay.   November  28,  1984.   Do  you  want  me  to  go  on? 

11  0    Then  I  will  let  you  go,  yes,  go  on.   I  wanted  to 

12  get  you  started. 

13  A    Anyhow,  Ollie  asked  me  again  if  I  could  introduce 

14  him  to  —  I  think  he  knew  the  name,  I  think  he  saidj^^^H^^ 
'  ^^^^^H|^^^^^^^^^^^^^^^  and    he           to  him 

16  Central  America,  the  situation  here.   So  Z  said,  all  right, 

17  I  would  set  up  something  and  I  set  up  this  lunch.   I  called 
IS^^^^^^^^^^Rand  told  him  that  Colonel  North  who  dealt 

19  with  Central  America  from  our  point  of  view  would  like  to 

20  talk  with  him. 

21  He  said,  fine,  he  trould  be  interested. 

22  So  we  got  together  for  lunch  and. Ollie  gave 

23  him  a  long  pitch,  as  I  recall,  about  the  Central  American 

24  situation,  the  gravity  of  it,  the  seriousness  of  it,  and  all 

25  of  this,  and  talked  about  the  need  in  that  area  for 


























^  *  V* 


assistance.  W«  will  have  to  b«  cartful  because,  as  x 
ranenber,  and  I  must  say  I  don't  think  last  tima  I  said  this, 
but  Z  do  baliava  that  at  that  lunch  I  think  I  wasn't 
there  all  the  time.   I  think  I  went  off  and  made  a  phone 
call  and  went  to  the  bathroom,  so  I  can't  be  absolutely 
certain  of  everything  that  went  on. 

In  fact,  I  can't  be  anyway,  because  my  memory  is  not 
that  good,  but  I  do  remember  Ollie  and ^^^^H^^^ talking 
about  the  situation  dotm  there  ^^^^f^^H^was  very  much 
interested  in  it. 

interested  in  Central  America, 

So  they  had  quite  a  conversation.  They  passed  me 
by,  I  didn't  know  anything  of  this  stuff,  but  they  knew  this 
and  they  were  talking  back  and  forth  about  all  this.   Ollie 
got  on  to  the  need  down  there  for  the  contras,  and  he  talked 
to  him  about  the  sale  of  weapons,  as  I  recall. 

Again,  I  can't  —  as  Z  remember,  I  don't  know 
whether  he  specifically  talked  about  s&le  of  weapons  to  the 
contras.   He  talked  about  sale  of  treapons  generally  there. 
Obviously,  the  contras  would  benefit.  Whether  the  contras 
would  buy  the  wapons  that  is  beyond  urn. 

1   wasn't  —  I  didn't  know  how  that  went.   It 
could  have  been  for  all  I  know  the  sale  of  weapon*  to  Honduras 
























1  just  don't  know  wh«t  th«  conv«r««tion  was,  how  it  went  in 
that  sense,  because  it  was  a  very  broad  and  general  one,  but 
clearly  he  was  talking  about  the  contras  needs  and  so 
forth  involved.   No  question  about  that. 

Anyway,  that  was  the  gist  of  it.   I  left  and  I  think 
they  sort  of  walked  out  together,  as  I  remember,  and  I  left 
and  that  was  the  end  of  that  and  again  the  next  thing  I  heard 
was  from 

Q    But  a  different  person? 

A    Oh,  yes,  a  different  person.   And  he  said  something 
to  me  at  a  reception  or  dinner  or  something,  he  just  said, 
oh,  by  the  way,  I  sent  bac)<^^^^H^Ka  report  on  the 
conversation  betweenH^^^^^^^B)and  Xolonel  North, 
said  fine.  And  I  think  I  told  Ollie  that. 

That  was  the  end  of  that.   I  never  heard 
another  word  about  it. 

Q    Okay.   Let  me  just  ask  a  few  more  questions 
about  this  one  as  well. 

A    Sure. 

Q    It  is  your  recollection  then  that  Colonel  North 
already  knew  of  the  name  oi 

A    I  think  so. 

Q    So  he  had  — • 

He  could  have  s«i<^d^^BB^B  ^"^ 


'  lyjr  OiLOixxiA 


1  he  may  have  mcntlonisd  hife  by  naiMr.  x  ««n't  sw««r  to  that, 

2  but  X  juit  don't  rememb«r  that  typa  of  thing. 

3  Q    Unlike  tha  other  tituationa  it  was  not  merely  a 

4  request  to  set  him  up  with  someone  from  that  country,  it  was 

5  either  — 

6  A    No,  I  think  it  was  more  specific.  As  I  say,  I 

was<^^^^^^^^^^^^^H  he 

8  Q    And  had  you  known,  did  you  have  a  relationship 

9  with( 

10  A 

11  Q 

12  A 

13  Q 

14  A 

15  remember. 

16  Q    But  your  recollection  i»  that  Colonel  North  asked  to 

17  speak  directly  to  this  person  or  t( 

18  A    I  don't  know,  it  could  have  been  by  name  or  could 

19  have  beeii|H^^^^^P^^P    can't  say. 

20  Q    But  he  had  not  previously  — '  I  shouldn't  say 

21  previously.   I  aa  not  sure  I  have  all  the  dates  right.   But 

22  as  to  the  other  people  he  had  not  specifically  asked  to  speak 

23  to( 

24  A    Oh,  no,  no.   That  is  right. 

25  Q    When  he  asked  you  to  set  this  one  up,  I  take  it  once 

Oh,  yes,  I  know  hin. 

You  have  kno«m  him  for  a  long  time? 

I  know  them  all  over  there. 

I  wasn't  sure  how  long  he  had  been  here. 

He  had  been  here  quite  a  litfrle  while,  as  I 



■  iiJV   iS>£i01\JLji 

1  again  he  indicated  that  he  wanted  to  talk  to  the  person  about 

2  Central  America? 

3  A    Yes.   Oh,  yes. 

4  Q    Then  you  got  the  lunch  together? 

5  A    Yes. 

6  Q    And  during  —  let  tne  sort  of  probe  your 

7  recollection  of  this  lunch  a  little  bit  more.   Was  it  a 

8  lengthy  lunch? 

9  A    I  wasn't  —  I  don't  know.   I  wouldn't  say  it  was 

10  lengthy.   No. 

11  Q    Was  it  an  all-afternoon  affair? 

12  A    Oh,  no,  no,  an  hour  maybe.   I  don't  know. 

13  It  was  a  normal  course  of  things,  it  was  not  a  lengthy  lunch, 

14  no. 

<{5        Q    Did  General  Singlaub's  name  come  up  during 

18  the  course  of  this  luncheon? 

17        A    Never,  not  to  the  recollection  I  have. 
1g        Q    Do  you  have  a  fairly  firm  recollection? 
ig        A    Of  whether  Singlaub's  neune  came  up? 

20  Q    ^••• 

21  A    I  don't  know.   I  can't  swear  to  it,  but  I  certainly 

22  don't  remember  it  coming  up. 

23  Q    By  this  time  you  knew  at  least  who  General  Singlaub 

24  «•»' 

25  A    Oh,  I  knew  who  Singlaub  was. 

TOP^  sBtdltET 







Q         So  It  would  not  h«v«  b«*n  on*  of  th«  unfamiliar 
naiMS  Ilka  1^^^^^^^^ people  who  cama  up? 

A    No.   No,  that  la  right.   If  Slnglaub's  name  came 
up,  I  might  have  remembered  It,  yea,  oh,  yes. 

0    Did  you  know  a  many  by  the  name  of  General  Secord  by 
this  time? 

A    No,  never  did. 

Q    Since  November  1986,  he  has  become  — 

A    He  has  become  a  name  now  that  I  read  out  of  the  paper 
X  never  heard  of  the  man  before  I  read  the  papers. 

Q    Do  you  have  a  recollection  of  whether  his  name 
cam*  up  at  this  lunch? 

A    No. 

0    I  take  It  you  would  be  less  Vlkely  to  remember  that 

A    Probably. 

Q    Since  you  would  not  have  had  prior  familiarity  such 
as  with  the  name  Slnglaub? 

Q    Okay. 

A    Secord  wouldn't  have  meant  anything  to  me. 
Q    During  the  course  of  this  lunch,  I  take  it 
Colonel  North,  once  again,  gave  his  assessment  of  the 


1        dcsparatc  itral^hta  of  th«  contraa. 



2  A    Y«i.  oh»  y«i. 

3  Q    Of  th«  Nicar«9u«n  resiitanc*.  th«  contras? 

4  A    Yea,  I  think  th«  regular  ~ 

5  Q    Did  you  have  any  knowledge  or  senae  that  the 

6  Boland  Amendment  had  recently  become  effective?  Was  that 

7  something  you  follows? 

8  A    I  knew  nothing  about  that.  We  heard  talk,  but  I 

9  paid  no  attention  to  that. 

10  Q    It  was  not  your  area? 

11  A    It  was  not  in  my  area.   It  meant  nothing  to  me. 

12  Q    And  again,  at  this  time  Colonel  North  is  talking  to 
14        A    Yes. 

Q    It  would  make  sense  to  me  that  he  is  talking  to  this 

16    guy  not  about  blankets  but  — 

A    I  think  I  said  something  to  Ollie  at  the  end  on  the 
way  out  withoutfCj^UB hearing,  something  about  you 
sure  all  thia  ia  legal  that  you  are  doing,  Ollie?  He  said, 
oh,  yea.  everything  ia  legal.   I  aaid'that  ia  all. 

Q    I  take  it  you  have  a  clear  recollection  that 
colonel  -  you  indicated  you  were  not  abaolutely  sure,  but  I 
am  aure  you  had  a  clear  recollection  that  Colonel  North 
wanted  arma  for  contraa  either  througK|mm)or  — 

A    Aa  1  aay,  I  don't  know  how,  but  he  clearly  expressed 

■F.2  ".  =;  :",  "i*'^ 


'X   U^i-i  V,/1VLj^ 










the  view  that  the  contrae  heeded  ermi,  no  question  about  that. 
But  he  talked  about  —  he  put  it  in  auch  a  broad  sense, 
everybody  needed  arms,  you  know  what  I  mean,  so  did  all  the 
rest  of  them  dotm  there.   I  mean  it  was  this  kind  of  a  thing. 
So  that  is  why  I  have  to  be  a  little  careful  about  how  I  say 
this  because  I  do  want  to  say  that  that  is  the  way  he  did  it. 
But  certainly,  obviously,  I  had  the  impression  that  the  idea 
was  arms  to  be  provided  somehow  for  the  benefit  of  the 

Q    Either  by  — 

How  it  was  done,  I  didn't  have  the  vaguest  idea. 

Either  by  selling  directly  to  the  contras  or  selling 
who  provided  them? 

Or  to^^^^^^Hor  whatever ^  I  don't  know. 



them  t 





























Q    So  as  you  ar«  leaving  you  had  this  conversation 
with  Colonel  North,  you  asked  hi0>— 

A    Z  sort  of  did  it  in  passing.   Z  said,  you  sure 
everything  is  legal  here  now,  Ollie.  He  said,  oh,  he  did. 

Q    Anything  more? 

A    That  was  all.   I  took  off  and  I  think  he  and 
^may  have  talked  longer,  or  they  may  have 
walked  on,  I  don't  know. 

Q    Did  you  ever  discuss  this  event  with  Mr.  McFarlane? 

A    No. 

Q    Or  anyone  else? 

A    NO. 

Q    Or  anyone  in  the  State  Department? 

A    NO. 

Q    Or  anyone  else? 

A    No. 

MR.  BGGZfSTOHi  Steve,  do  you  have  anything? 


Q    One  question.  Where  there  any  other  issues  discusse< 


1  I  «t  that  mettlng  such  as  terrorism  or  counttr-terrorlsa,  anti- 


terrorism  policy  b«twe«n  the  U.S.( 

A    Zt  Is  possible.   It  might  have  been.   But  I  can't 
remember  that.  They  talked  about  —  they  sort  of  went  over  a 
lot  of  things.  As  I  say,  I  didn't  pay  that  much  attention 

0  It  is  your  clear  impression  that  the  main  purpose 
of  the  meeting  was  to  discuss  the  need  for  equipment  and/or 
supplies  for  the  centres? 

A    Oh,  sure.   No  question  in  my  view. 
MR.  BERRY:   ThanJc  you. 
THE  WITNESS:  As  I  remember  it. 

0    Ha*  this  meeting  ever  mentioned  to  Bud  McFarlane 
as  far  as  you  can  recall? 

A    Not  as  far  as  I  — 
Q    By  you? 

A    Not  by  me.  My  assumption  %rould  be  surely  it 
must  have  been  mentioned  by  Ollie.  My  assumption  was  they  wen 
pushing  together  on  this  thing,  and  so  was  everybody  else  for 
that  matter.   I  had  no  reason  to  think  otherwise. 



0    I  undtrstand.-' " -'  ■- •'  *  ■;-'  -.."  i  -'  ' 
A    1  did  not  think  oth«rwiM. 
Q    I  just  meant  you  personally. 
A    NO.   1  didn't. 

MR.  SMIWANICH:   That  is  all. 
Q    Let's  go  back  to  — 

A    Back  tefl^^^ thing  and  Ollie's  --  I  think  what 
he  may  have  put  down  there.  I  a«  sure  I  probably  told  him  I 
was  seeing H  he  may  have  put  that  down  that  1  was. 

Q    Actually,  though,  hi.  calendar  is  maintained  not  by 
himself  but  that  is  the  handwriting  of  his  secretary. 

A    He  could  have  said,  though,  that  I  was  seeing  him. 
Then  I  told  him  later  that  I  had  seen  him  and  gave  him  the 
number  and  then  I  don't  know  what  J..  »i9ht  have  done  with  it. 
But  that  i.  Possibl..  I  «  i«.t  trying  to  suggest  how  it  coulc 

have  been. 

Q    Okay.  I  ««  "*<»y  *<»  *•''  y°"  **^'*'' 

A    Fine. 

Q    1   take  it  this  1.  substantially  in  the  summer  of 

1986.  by  that  tim.  you  -r.  i.  that  right 7 

A    Yes.  I  «••  here. 

0   0k.y.  «,,  don't  you  t.ll  ™  «i»t  h.pp.n«l. 

»   «U.  twr.  I.  not  ».cn  to  ..,.  «.  ^t  th. 



























that  gives  you  th«  rundown  of  it.   I  discu«««d  it  with 
Secretary  Shultz  on  the  plana  going  t 

and  I  don't  know  how  the 
decision  had  been  made,  but  apparently  a  decision  had  been 
made  to  request  ■mUmmimH  to         $10 
for  assistance  to  the  contras.   It  was  told,  the  Secretary 
told  me  this,  and  I  made  some  question  about  possibly  saying 
something  to^^^^H^^Bwhen  we  met  him.   I  said  I  thought  that 
would  be  wrong. 

I  thought  you  had  to  kind  to  talk  to  other  people 
around  him,  that  you  just  can't  talk  to  him  directly  like 
that.   So  anyway,  that  was  given  up,  the  idea  of  doing  that. 

So  as  the  cables  indicate,  this  is  how  we  did  it 
another  way,  by  having  the  Ambassador  »peak  and  Elliot 
Abrams  went  to  London.   That  was  that. 

Q    You  are  on  the  plane  betwee 
how  did  the  subject  come  up? 

A    The  Secretary  talked  to  me  about  it.  He  raised  it. 

Q    Nhat  did  he  tell  you?  Just  as  best  you  can 
recall,  what  did  he  say? 

A    He  said  he  was  thinking  of  making  an  approach 
to iHHjjjj^HHUHHjjH^^I^^IHJ^^IBand  see  whethei 
could  provide  $10  million  to  the  contras  for  humanitaiian 
assistance  and  Z  said  I  didn't  think  it  was  a  good  idea  for 
him  to  do  it.  That  is  all.  Z  thought  it  was  not  right. 

i'.'i      ti   -f.    "ty  'a  k»  I  K<  K 


1  I  mean,  it  was  not  th«  way  to  handle  it.  That  ought  to  b« 

2  dona  through  other  channels.   It  is  not  for  him  to  do  it. 

3  Q    Because  the  Secretary  of  State  shouldn't  be 
*  directly  asking  for  money  from  a  foreign  government? 

5  A    That  is  exactly  right.   So  that  was  the  way  it  was. 

6  Q    I  take  it  prior  to  this  time  that  you  had  no 

7  knowledge  that  the  Secretary  of  State  was  going  to  raise  this 

8  issue  or  wanted  to  raise  this  issue? 

9  A    No,  I  had  no  knowledge  of  it. 

10  Q    Did  he  tell  you  anything  more  about  where  the  idea 

11  came  from? 

12  A    No,  he  did  not. 

13  Q    Did  you  know  whether  Mr.  McFarlane  had  any 

14  involvement  in  this? 

15  A    I  had  no  idea.   Of  course,  it  was  not  McFarlane, 

16  Poindexter. 

17  Q    Poindexter,  yes,  sorry. 

18  A    I  had  always  assumed,  though,  you  have  to  remember, 

19  just  as  I  did  on  the  other,  I  assumed  that  was  not  an 

20  individual  account.   This  was  the  account  of  a  government 

21  and  these  decisions  were  made  by  McFarlane  and  Shultz  and 

22  Weinberger  and  maybe  I  was  wrong  in  my  assumption,  but  that 

23  was  my  assumption.   My  assumption  would  be  on  something 

24  like  this  we  are  talking  about  a  situation  decision  that  was 

25  taken  by  Shultx,  Poindexter,  so  on,  Weinberger. 

pjj  y  '^  ^  -  ^  ^iLPifcCL 






















0    Right. 

A    And  I  had  no  raaion  to  question  that.  No  reason. 

0    It  was  your  assumption  that  Shultz  didn't  get 
this  idea  all  by  himself  setting  on  the  plane? 

A    I  couldn't  believe  that,  no,  I  didn't  think  so  at 

Q    Was  thtere  any  discussion  with  Mr.  Shults  or. 
Secretary  Shultz  about  where  the  10  million  figure  came  from? 

A    NO. 

Q    It  is  a  larger  figure  than  — 

A    Pretty  substantial  figure,  but  I  have  no  —  of 

Q    Was  it  your  understanding  this  was  going  to  be  a 
request  of  —  maybe  this  is  tough  in  tikis  area  •".   of  him 
personally  or  of  is  government? 

A    Well,  it  doesn't  matter .,|| 

Doesn't  make  any  difference. 
So  10  million  from  him  %rauld  be 


Q         Did  you  during  the  course  of  this  talk  to  Shultz 
about  the  prior  solicitations? 
A    No. 
0    No? 


"  td*i'&M)kt'i' 



















Q        Did  you  mvt  talk  about  that  with  Mr.  Shulti? 

A  NO. 

3  Q    I  don't  want  to  go  through  a  lot  of  detail  about 

4  how  tho  dacialon  waa  actually  mada,  but  wara  thara  othar 

5  paople  participatin?  in  thia  convaraation? 
Q       A    Charlia  Hill. 

-       Q    Charlia  Hill  waa  participating? 

A    Yas. 

Q    Did  ha  alao  agraa  with  you  that  you  ahould  not 
go  to  ^^^^^fhdiractly? 

A    Charlia  didn't  aay  much,  but  Shultx  agreed. 
Aa  aoon  aa  ha  thought  about  it,  ha  agreed. 

Q    Who  waa  it  who  decided  that  the  beat  way  would  be 
to  go  through  the  Aabaaaador  or  whatever? 

A    Oh,  I  think  we  talked  about  it,  thought  that  was 
the  only  way  to  go  about  it.  That  aay  have  been  my 
auggeation.   I  don't  know.   I  eaid  you  got  to  -  we  talked 
about  it.  it  •••aed  the  way  to  go.   I  don't  know  that  anybody 
a.  on.  peraon.  it  wa.  aort  of  a  --  ju.t  that  i.  the  way  to  do 


0    Maybo  ainca  wa  are  in  a  depoaition  we  can  get  this 

down  for  th.  record,  you  ahould  de.cribe  --  I  know  you  have 

don.  it  befor.  -  but  d.acrib.  how  th.  alt.mativ.  way  wa. 


A    Which  alternative  way? 


1  0    To  ua«  th«  Amb«ss«dor  and  if  you  could  just 

2  d««crlb«  what  actually  than  cndad  up  happanlng? 

3  A    What  actually  happened  was  that  wa  got  tha 
^  Ambassador    comf^^^^^^^^H^and  meat    there. 

S  Q    This  is  Ambassador  -- 

^  A  I^Ktb    ^'^  ^*  c*i»*  "id  ^  talked  with  him  about  what 

7  the  Secretary  was  interested  in  and  he  said,  well,  the  way  to 

^  handle  this  would  be  for  ma  to  quietly  talk  to  the 

9  flH^IB*^^'     to  ^^BB  himself,  and  so  that  is  the  way  it 

10  happened.   That  is  what  he  did  and  then  the  arrangement  was 

11  made  that  Elliot  Abrams  meet  with  this  aid,. 
■2  Q    vrhat  was  the  ai^^'s  nana? 

A  ^^^^^^^H^^^^^^H   And  he  met      him  in 

14  London.   I  don't  know  what  happened,  i  don't  know  again 

15  except  they  got  the  money,  I  guess.  But  I  don't  know  what 

16  happened  to  tha  money.  - 

17  Q    That  is  a  good  question. 

18  -    A    X  have  no  idea  about  that. 

19  Q    You  don't  know  where  the  money  is? 

20  A    I  know  nothing  about  that  money. 

21  Q    You  don't  hava  tha  money? 

22  A    All  I  know  is  I  haven't  got  it. 

23  MR.  SMILJANXCBt  Does  anyone  hare  have  the  money? 

24  MR.  EGGLESTONi   We  can  at  least  eliminate  who  is 

25  here;  right? 






0    H«v«  you  b««n  --  I  -ould  "•"»•  th«t  ther«  would  be 
■ooM  discussion  then  between  the  government ^^m^m 
HHand  our  government  about  where  the  money  Is  or 
that  it  had  been  received  or  had  not  been  received.   Have 
you  participated  in  that? 

A    The  only  thing  I  know  about  that  is  in  the  cables. 
I  haven't  participcated  in  any  discussion.   I  have  no  idea. 
Ail  I  know  i.  what  the  cables  say.   I  know  nothing  more. 

Q    All  right.   Oo  you  know  as  of  August  of  the  summer 
of  1986  that  the  money  was  about  to  be  r.-upped  for  the 
contras,  another  hundred  million  — 
A    From  the  Congress? 
Q    From  the  Congress,  yes. 
A   I  r-i  the  papers.  Other  than  that,  I  didn't  know 

anything  about  it.  - 

Q    There  was  no  discussion  with  Kr.  Shultx  about 
Why  we  are  doing  this.  Congress  is  allocating  the  money. 
A    if  yott  mean  did  I  do  that,  no,  I  did  not. 
Q    you  didn't  have  any  discussion  with  the  Secretary 
.bout  the  wisdo-  of  this  «.rt  of  solicitation. 
X    MO,  X  didn't. 
Q    Just  the  mechanics  of  it. 
A    That  is  .xactly  all.  A.  far  as  I  knew  the 

^  .-  I  MV.  I  assume  the  decision  was 

decision  was  made  and  as  I  say,  i  ""^    ^ 







r  "■    '  ~  ■""»■,'- 1 

!  : .    ,       .  .    ..  •; .  ^i  d) 

m«d«  by  th«  top  p«opl«  In  th«  govarnBicnt. 

Q        Did  h«  — 
A         And  it  w«f. 

0    Did  h«  tail  you  who  had  b«en  involved  in  the 

A     No. 

MR.  EGGLESTONi   I  don't  have  anything  else  on  this. 

Q    I  just  %fonder.   How  did  you  Icnow  that  Abrams  met 
vith  I^^^^^Hl  Be  met  sometime  later. 
^2        A    I  don't  know  whether  he  met  with|^^^^HHor  not. 

13  Because  we  had  arranged  it  in  the  cables  that  went  bade  and 

14  forth. 

15  Q    At  the  time  you  were  therein  the  — 

16  A    No.  They  were  back  her*. 

17  Q    You  case  back  here  and  then  arranged  it  then? 

18  ..  A    Yes. 

19'       0    So  you  were  just  aware  of  one  meeting  with  Elliot? 

20  A    Yes.  t 

21  0    Clearly  because  of  cable  traffic? 

22  A    Yes,  you  know,  those  things,  my  name,  I  think,  is 

23  in  those  cafl^s.  After  all,  I  am  the  guy  who  coanunicates 

24  with  our  anbassadors  in  Asia. 

28       0    1  wonder  if  you  had  talked  to  Elliot  about  that. 





^-«rvyx    i^u' 

A    Oh,  w«ll,  only  in  th«  f*ct  of  him  going  to  London 

to     ^^^^sim^^Hi 

Q    You  briefed  Elliot  before  he  went  to  London? 
A    NO.   No,  1  didn't  brief  him.  He  was  talking  to 
them.  There  was  nothing  to  brief  in  a  sense.  He  was  the  one 
who  was  going  to  make  the  case.  He  knew  all  about  it.   I 
didn't  know  anything  about  that. 

And  since  I  can't  make  a  case  for  or  against  them, 
other  than  I  support  the  Administration  policy,  but  I 
didn't  know  the  ins  and  outs  of  it. 

Q    I  just  wonder  if  you  briefed  Elliot  about  the 

A    If  I  remember  correctly,  I  don't  think  I  briefed 
hi».   I  think  we  had  a  -  w.  have  the s*  sheets  on  key  official 
in  governments  around  the  world.   I  think  there  was  such  a 
Sheet  which  he  looked  at  as  I  remember.  We  gave  it  to  him. 
we  have  that  on  everybody  in  our  region.  These  are  put  out 
by  the  agency.   But  they  just  give  you  a  general  statement 
about  who   these  people  «..   I  think  there  was  one  on 
I  know  there  was  one  on  ^^^^H 


Q    But  that  i.  the  only  contact  you. had  with  Elliot 

about  this? 

A    Yes,  that  Is  correct. 





















'JL   t-^i 

I  have  no  question 

but  there  was  one 

question  I  forgot  to  ask  you  about 

series  of  events.   Yovfiiad  started  off  by  saying  that  you 

had  gone  back  and  looked  at  your  calendar  on  November  28, 

1964.   Could  we  see  exactly  what  is  in  your  calendar  for  that 


A    Yes.  you  can.  That  is  no  problen.  You  see  my 
difficulty  was  that  I  have  another  meeting  witr 
at  the  Cosmos  Club,  and  that  is  the  one  I  thought  may  have 
been  —  what  is  the  date  of  that?  November  287 

Q    November  28. 

A  mev^^^^^^^^^H  occasionally 

August  what? 

Q    November  28. 

A    November  28.   Excuse  me. 

Q    1984. 

A    Let's  see  if  I  have  the  right  calendar.   Here  it  is. 
This,  by  the  way,  is  one  calendar,  I  was  keeping  two 
because  I  kept  one  at  the  university.  This  is  the  one  that 
has  the  indication  right  here.   I  obviously  had  a  luncheon 
with^^^^^^^^^H  then  you  see  what  I  have  %rritten  here. 











15  < 











Th«n  Z  put  Cosmos  up  her*.  So  Z  think  that  is  — 
■••  thst? 

Q    Right. 

A    That  is  what  I  have  h«r«.   I  was  not  sure  about 
that  because  you  see  it  looks  confusing.   You  understand  the 

Q    Thank  you. 

A    Fine.  That  is  fine. 

Q    I  only  have  one  other  area  to  ask  about  and  I  just 
want  to  ask  a  couple  questions  about  things  that  may  have 
come  up  during  the  course  of  that  meeting  with 
It  lunch  at  the  Cosmos  Club. 

A    All  right. 

Q    Do  you  "'  all  —  I  understand  you  are  not  sort  of 
involved  in  thi»,  but  you  are  sitting  here.  Do  you  recall 
conversatiofn  about  Canada  coodng  up  during  the  course 
of  that  meeting,  an  arms  deal  through Xanada 7 

A    No. 

Q    Anything  like  that? 

A    NO. 

Q    Do  you  think  — 

I  don't  recall  that. 




iJljVii/AVi-l  X      

Ml  right. 

I  can't  .wear  it  didn't,  but  I  don't  recall  it. 
YOU  don't  racall  it.  That  i»  what  I  wa.  going  to 
ask  you.  Do  you  hava  a  firm  racollaction? 

A    NO.  I  don't.   I  don't  hava  a  firm  recollection. 
A.  I  .ay.  the  meeting  wa.  .ort  o£  diffu.e  a.  far  as  I  could 
determine.   It  didn't  hold  my  attention.   I  didn't  listen 
and.  a.  I  say.  I  do  believe  I  took  off  in  the  middle  of  the 
dinner,  or  lunch,  rather,  and  went  to  the  bathroom.  But  it 
wa.  a  very  diffu.e  type  of  thing. 

1  have  given  you  what  I  think  they  talked  about 
baaically.  But  I  don't  recall  anything  about  Canada,  no. 
Q    YOU  don't  have  any  recollection  that  some  of  the 

A    I  don't  know.  I  have  no  indication  of  that.  A.  far 
e.  I  know,  I  have  no  recollection  o£  that. 

Q    There  i.  a  man  who  .ometime.  aa.ociates  with 
I  Canada,  I  think  hi.  nam.  i.  Wittenberg  or  Wittenstein.  I 
would  hat.  to  .ay  for  .ure  which  -  did  that  nam.   come  up? 
A    HO.   I  don't  remember  any  name,  of  any  kind.  no. 
Q    DO  you  recall  any  .pecific  of  Calero. 

Adolf o  Calero  coming  up? 

A    calero'.  name  may  well  have  been  mentioned.   A. 
0111.  talked  about  the  whole  .ituation.  I  suppo.e.he  mentioned 





ntMi  of  p«opl«,  but  X  don't  r«»««ib«r  •pacifically,     in 
oth«r  words,  that  wouldn't  turprlM  »•  if' •  naiM  had 

com*  up. 

Q    You  knaw  who  Calero  waa? 

A    I  knew  who  ha  waa.   1  hava  read  about  him  in  tha 

A    That  waa  raiaad  with  ma  laittima.   I  do  not 
r«i-mbar  that.   I  don't  racall  that  Kind  of  a 
But.  a,ai«,  a.  I  -y.  I  wa.n't  thar.  all  th.  tima.   I  don't 
think  -  and  again,  it  i.  po.aibla.  I-aaauma.  you  know,  that 
that  probably  wa.n't  th.  la.t  -tin,«.  Olli.  and  th. 
Gan.ral.   I  don't  know  whath.r  that  i.  right  or  not.  but  I 
aaaum.  th.y  -y  hav.  gon.  -  whan  I  l.ft,  I  l.«t.  th.y 
.u„g  around.  Thay  war.  moving  off  in  aaparata  dir.ctiona.  but 
for  all  X  know  thay  -y  hav.  talkad  anothar  15.  20  minut... 

^  f  •*  1 




















X  don't  know. 

0         You  didn't  )c*«p  track  of  th«  dcalln?*  th«t  011i« 
waa  having  withN 

A        'No,  oh,  no. 

Q    I  hava  asked  you  earllar  if  you  knew  who 
General  Slnglaub  waa  and  you  Indicated  you  did.   Did  his  name 
come  up  at  all  in  connection  with  any  of  these  operations  as 
someone  who  had  been  out  there? 

A    Only  in  the  sense,  as  Z  mentioned,  thati 
as  Z  recall,  stated,  as  I  thought  about  it,* 
mentioned  that  he  had  been  ^^^^^^^  But  otherwise,  no.  Not 
to  me.   I  don't  recall  01 lie  ever  mentioning  him  to  me,  or 
any  of  the  others. 

But  they  didn't  —  remember,.!  didn't  talk  to  them. 
Z  never  talked  to  any  of  them,  except ^^H^initially,  at  all. 
for  inatance,  ten  minutes,  Z  mean  that  was  it. 

it  was  with  Ollie  and  he  was  doing  all  the 


I  never  said  ttro  words.  They  were  talking  and  Z 
just  don't  recall  names  at  that  tiaa^. 

Q    Okay.  Z  don't  think  Z  have  anything  further,  althot. 
Z  will  take  a  odnute  and  maybe  we  can  take  a  brief  break  and 
Z  can  look  over  my  notes. 

MX.  SMZLJANZCHi   Yes,  let's  take  alittle  break. 
MR.  BGGLESTONi   Zs  that  all  right?  So  we  can  take 



i;     -Tfj^-'WttrVftin^  Vou-^lwit  it  for  us  tc 

1  a  look  at  our  notes;     -Tfi«''nstr  VnM^  Vou'-*'*^t  is  for  us  to  b« 

2  back. 

3  THE  WITNESS:   All  right.   That  is  all  right.   Ask 

4  what  you  want  to  ask.   So  let's  take  a  break 

5  (Recess.) 

6  MR.  EGGLESTON:   Back  on  the  record 

7  THE  WITNESS:   I  am  very  pleased  to  do  anything  I 
9  MR.  EGGLESTON:   Let  me  close  out  the  record.  We 

10  thank  you  for  cooperating  with  us  today,  Mr.  Sigur.   We  don't 

11  have  any  further  questions  and  we  appreciate  your  talking  with 

12  us. 

13  THE  WITNESS:   Thank  you.   That  is  all  right 

14  (Whereupon,  at  3:40  p.m.  the  deposition  was 

15  adjourned.) 

"  l!lWR3S*I»fift' 



ONCLASSIRED    *^j'!^ 


3  COKNO— / OF — ^ .COWES 





8  Monday,  June  1,  1987 


10  United  states  Senate, 

11  Select  Committee  on  Secret  Military 

12  Assistance  to  Iran  and  the 

13  Nicaraguan  Opposition, 

14  Washington,  D.c. 

15  The  deposition  of  MAJ.  CHRISTOPHER  SIMPSON  was 

16  convened,  pursuant  to  notice,  at  9:20  a.m..  Ninth  Floor, 

17  Hart  Senate  Office  Building,  the  witness  being  first  duly 

18  sworn  by  JANE  W.  BEACH,  a  Notary  Public  in  and  for  the 

19  District  of  Columbia,  and  the  proceedings  being  taken 

20  down  by  Stenomask  by  Jane  w.  Beach  and  transcribed  under 

21  her  direction. 


C»PY  NO -iJibf L — COPIED 

""^^  u,^er  pfo»Wons  of  LO.  123S6 

-  by  D.  Sirko,  National  Security  Council 






4  On  behalf  of  the  Senate  Select  Committee: 

5  JOHN  SAXON,  Esquire 

6  United  States  Senate  Select  Committee 

7  on  Secret  Military  Assistance  to  Iran 

8  and  the  Nicaraguan  Opposition 

9  901  Hart  Senate  Office  Building 

10  Washington,  D.C.  20510 

11  On  behalf  of  the  House  Select  Committee: 

12  ROGER  KREUZER,  Esquire 

13  On  behalf  of  the  United  States  Army: 

14  CHARLES  LAWSON,  Esquire 








4  Examination  by  Counsel  on  Behalf  of 

5  Senate  Select      House  Select 

6  Deposition  of: 


8  By  Mr.    Saxon 4 

9  By  Mr .    Kreuzer 26 

10  By  Mr.    Saxon 29 






3  Whereupon, 


5  was  called  as  a  witness  by  the  Senate  and  House  Select 

6  Committees  and,  having  been  first  duly  sworn  by  the  Notary 

7  Public,  was  examined  and  testified  as  follows: 


9  BY  MR.  SAXON: 

10  Q    Would  you  state  your  name  for  the  record,  please, 

11  sir? 

12  A    Christopher  Simpson. 

13  Q    What  is  your  occupation? 

14  A    I  am  a  Finance  and  Accounting  Officer  in  the 

15  United  States  Army. 

16  Q    What  is  your  rank? 

17  A    Major. 

18  Q    And  what  is  your  current  assignment? 

19  A    I  am  the  Finance  and  Accounting  Officer  for 

20  Fitzsimons  Medical  Center  in  Denver,  Colorado. 

21  Q    When  did  you  assume  that  position? 

22  A    Late  June,  '86. 

23  Q    And  what  were  you  doing  prior  to  that  position? 

24  A    I  was  working  on  the  Army  Staff  in  the  Office  of 
2  5  the  Deputy  Chief  of 


PaftUty  OwiMMMl/Rcleaaed  on  -^^^^    -^ -'  ''^•^^ 
umler  provWont  of  E.O.  12356 
kr  D.  SMo,  NaikMMl  SKurlty  Council 



























Q    And  what  were  the  dates  of  that  assignment? 

A    Roughly  1  September  '86 — or,  excuse  me, 
1  September  '83  to  late  June,  '86. 

Q    And  in  that  assignment,  what  were  your  particular 
duties?   I  believe  you  told  us  earlier  that  you  had  both 
white  world  and  black  world  functions. 

A    Yes,  sir,  that  is  correct. 

Q    Let  me  say  for  the  record,  by  the  way,  that  when  I 
make  reference  to  the  fact  that  you  have  told  us  something 
earlier,  I  am  having  in  mind  that  on  April  14th  you  met  with 
several  members  of  the  House  and  Senate  staffs,  in  fact  for 
about  six  hours,  and  we  had  a  lengthy  discussion  about  these 
matters.   So  when  I  say  you  have  told  us  before,  that  is 
what  I  have  reference  to  for  subsequent  readers  of  this 

Now  I  believe  you  told  us  that  you  had  both  white 
world  and  black  world  missions  in  your  desk  log  assignment. 

A    Yes,  sir,  that  is  correct. 


Q    And  you  were  in  this  position  when  the  initial  TOW 
missile  request  came  for  the  Army  to  transfer  TOW  missiles 
to  the  CIA.   Is  that  correct? 

A    Yes,  sir,  that  is  correct. 

Q  And  you  were  more  or  less  the  principal  individual 
for  executing  on  that  request  at  the  Department  of  the  Army? 
Is  that  a  correct  assessment? 

A    Yes,  sir,  that  is  a  correct  assessment. 

Q    What  I  would  like  to  do,  Ma j .  Simpson,  rather  than 
immediately  having  you  walk  us  through  the  chronology, 
because  your  involvement  was  so  extensive  and  this 
discussion  is  going  to  be  rather  lengthy,  let  me  ask  you  a 
number  of  specific  questions  from  the  outset.   Then,  after 
we  cover  some  of  this  ground,  we  can  go  back  in  and  pick  up 
the  story  in  chronological  order. 

First,  when  did  you  first  become  aware  that  the 
destination  for  the  TOW  missiles  was  Iran? 



1  A    When  did  I  first  become  aware  of  it? 

2  Q     Yes. 

3  A    When  I  opened  up  The  Washington  Post  newspaper  in 

4  the  City  of  Denver  in  late  November  1986. 

5  Q    And  is  that  likewise  true  for  the  HAWK  repair 

6  parts? 

7  A    Yes,  sir,  that  is  true. 

8  Q    So  you  did  not  know  that  they  were  destined  for 

9  Iran  at  the  time  you  were  working  on  these  requirements? 

10  A    No,  sir,  I  did  not. 

11  Q    If  you  had  known  they  were  destined  for  Iran, 

12  would  that  have  affected  your  executing  on  the  requirement, 

13  or  what  would  have  been  your  response? 

14  A    Sir,  at  the  very  least,  besides  notifying  the  Army 

15  leadership  for  which  I  worked,  my  good  friend,  a  legal 

16  counsel  in  the  Office  of  the  Army  General  Counsel,  Tom 

17  Taylor,  I  would  have  gone  to  him  and  sought  his  advice  on 

18  that  matter. 

19  In  the  three  years  that  I  had  worked  there,  I  had 

20  be«n  instructed  both  by  the  leadership  and  by  my  predecessor 

21  boss,  now  retired,  never  to  do  anything  illegal.   And  I 

22  would  have  felt  that  we  were  doing  something  illegal. 

23  Q    Your  predecessor  boss,  now  retired,  that  would  be 

24  Col.  Stevens? 

25  A    Col.  Jeff  Stevens,  yes,  sir. 




1  Q    What  would  have  been  your  assessment  in  January 

2  1986  if  someone  asked  you  what  our  policy  was  toward  the 

3  shipment  of  arms  to  Iran? 

4  A    Sir,  I  would  have  flat  said  that  I  was  pretty 

5  intimately  familiar  with  it.   with  the  U.S.  Customs  folks 

6  that  I  had  worked  on  covert  operations  with,  there  were  any 

7  number  of  papers  in  my  office  where  they  were  asking  for  our 

8  assistance  in  covert  operations — in  fact,  a  snare,  deadbeats 

9  that  were  trying  to  export  arms  to  Iran — so  I  knew  in  fact 

10  it  was  a  violation  of  the  Arms  Export  Control  Act. 

11  That  Act  was  frequently  cited  by  the  Customs 

12  Service,  that  so-and-so  was  a  suspect,  and  that  they  were 

13  asking  for  our  assistance,  and  the  suspect  was  accused  of 

14  violating  U.S.  Code  umpty-ump  which  was  in  fact  the  Arms 

15  Export  Control  Act.   So  I  was  very  familiar  with  what  that 

16  means  in  terms  of  with  respect  to  Iran. 

17  Q    That,  however,  would  be  with  regard  to 

18  individuals. 

19  A    That's  true.   But  I  would  have  attached  the  same 

20  interpretation  to  any  government  dealings  with  Iran. 

21  Q    Was  the  legality  of  meeting  the  TOW  requirement  or 

22  the  HAWK  repair  part  requirement  raised,  to  your  knowledge? 
2  3  A  Well,  the  legality  of  supporting  of  it  absolutely 
24  was  raised.   Again,  I  went  to  Tom  Taylor,  a  very  competent 

2  5  counsel  in  the  Office  of  the  General  Counsel  of  the  Army, 













and  we  did  that  early  on. 

There  were  also  extensive  legal  reviews  on  the 
support  request  by  a  number  of  other  Army  principals, 
including  the  Deputy  Staff  Judge  Advocate  and  the  Army 
General  Counsel  herself. 

Q    That  would  be  Susan  Crawford? 

A    Yes,  sir. 

Q    I  believe  you  told  us  previously  that  you  were 
fairly  familia^itj^n^perated  frequently  through  the 

Army' J|^^m|^^H  ^ 

A    Yes,  sir,  that  is  correct. 

Q    And  am  I  correct  in  stating  that  the! 

■is  the  formalized  system  and  set  of  procedures 
employed  within  D^  f or  handling  sensitive  transfers  from 

the  Army  to  other  agencies,  principally  the  CIA? 

A    Sir,  you're  correct,  with  one  small  correction. 

loperates  down  to  the  Army  through  the 

Department  of  Defense. 

Q    Is  it  safe  to  say  that  the  TOV^ransfe^n^J^ 
HAWK  repair  parts  transfer  by  passed j 

A    Yes,  sir,  that  is  correct;  they  did  bypass  thi" 

Q    They  did  not  go  through  it? 

A    No,  sir,  they  did  not. 

Q    Are  you  aware  of  any  other  transfers  during  the 



1  time  you  were  at  DCSLG  from  D^A  to  the  CIA  which  bypassed 

2  ^^^^^^^ 

3  A    Sir,  there  were  no  other  transfers  after  September 

bypassed^^^^^^^^^^^^^^^^Hxhere  were 

5  any  large  number  of  new  controls  implemented  after  September 

6  of  1984  to  keep  the  Secretary  of  the  Army  informed  on  our 

7  support  to  the  Agency.   Prior  to  that  time,  there  were  small 

8  requests.   But  even  prior  to  September  of  1984,  there  was  no 

9  support  of  anything  that  killed  people  that  did  not  get  the 

10  Secretary  of  the  Army's  written  approval.   So  this  was  a 

11  major  departure  from  our  prior  procedures,  even  before  the 

12  extensive  controls  that  were  implemented  in  September  of 

13  1984. 

14  Q    Let  me  ask  a  question  about  pricing.   As  far  as 

15  you  know,  was  there  any  pressure  put  on  you  to  low-ball  on 

16  the  price  for  either  the  TOWs  or  the  HAWK  repair  parts?   By 

17  which,  I  mean  pressure  to  come  up  with  a  low  price? 

18  A    No,  sir,  there  was  no  pressure  at  all. 

19  Q    Are  you  aware  of  pressure  put  on  anyone  else 

20  within  the  Department  of  the  Army  to  come  up  with  a  low 

21  price? 

22  A    Not  within  the  Department  of  the  Army,  sir. 

23  Q    Are  you  aware  of  pressure  that  was  put  on  people 
2  4  outside  the  Department  of  the  Army  who  were  involved  with 
25  this  transaction  to  come  up  with  a  low  price? 



sf^i'iiej  Ji  II  11 

1  A    Sir,  I'm  aware  of  no  pressure  on  a  low  price,  but 

2  there  certainly  were  external  pressures  on  the  Agency  with 

3  regard  to  changing  the  price  once  we  had  initially 

4  established  a  figure  to  start  from. 

5  Q    Okay.   We  will  get  into  that  a  little  later..   Who 

6  first  came  up  with  the  price  on  the  TOWs  of  $3,169? 

7  A     Succinctly  put,  sir,  that  price  originated  from 

8  DCSLG,  Department  of  Army. 

9  Q    By  going  to  the  AMDF,  the  Army  Master  Data  File 

10  and  looking  up  the  price  for  a — 

11  A    —Particular  stock  number  that  matched  the 

12  terminology  for  a  basic  TOW,  which  is  what  the  Agency  was 

13  requesting  at  the  time. 

14  Q    And  approximately  when  was  that  price  arrived  at? 

15  A    Sometime  in  late  January,  1986. 

16  Q    So  within  the  first,  more  or  less  the  first  week, 

17  or  the  first  two  weeks  of  meeting  this  requirement? 

18  A    Yes,  sir,  that  is  true. 

19  Q    When  did  you  first  learn  that  there  was  a  price  in 

20  th«  AMDF  for  a  basic  TOW  with  safety  modification,  a  MOIC,  a 

21  M-O-I-C,  of  $8,435? 

22  A    Sir,  that  was  a  discussion  that  I  learned  about 
2  3  some  weeks  after  we  got  started.   It  emanated  from  the 

24  project  manager  TOW's  office  at  Missile  Command 

25  Headquarters. 






























Q    Col.  Lincoln? 

A    It  was  either  he,  or  George  Williams,  I  forget 
now;  one  of  the  two  of  the  principals. 

Q    Did  you  ever  see  that  figure  of  $8,435  on  any  of 
the  transfer  documents  or  shipping  documents  which  came  from 
Anniston  Army  Depot? 

A    No,  sir,  I  did  not.   I  am  aware,  at  this  late 
date,  though,  that  such  a  price  was  on  some  documents. 

Q    And  if  I'm  asking  you  to  speculate  here,  just  say 
so,  but  do  you  know  what  system,  or  process,  or  mechanism 
the  people  at  Anniston  Army  Depot  utilized  which  enabled 
them  to  come  up  with  that  figure? 

A    No,  sir,  I  do  not. 

Q    At  any  point  in  working  the  TOW  and  HAWK 
requirements,  were  you  aware  that  they  were  being  done 
pursuant  to  a  Presidential  Finding? 

A    Yes,  sir,  I  was  aware  of  that. 

Q    At  what  point  did  you  become  aware? 

A    Sir,  I  can't  precisely  tell  you  today  without 
referring  to  notes  and  papers,  but ^^^^^^^^^1  the  CIA 
Agency  Action  Officer  and  myself  discussed  that  early  on  in 
support  of  the  mission — in  the  early  days  is  all  I  can  tell 
you,  back  in  January  of  1986. 

Q   ^^^^^^^^^^^^^ 

r  there  at  the  CIA. 





1  Q    I  believe  you  told  us  that  there  was  fairly 

2  extensive  discussion  within  Dj^A  about  the  issue  of 

3  congressional  notification? 

4  A    Yes,  sir,  there  was  extensive  discussion  at  many 

5  levels  of  the  Army  leadership. 

6  Q    At  what  stage  did  that  issue  arise? 

7  A    Sir,  that  stage  arose  when  I  went  to  seek  advice 

8  and  counsel  from  Mr.  Tom  Taylor  on  the  legality  of  support 

9  of  the  mission  in  its  entirety,  and  within  a  few  hours  of 

10  when  I  went  to  see  him  he  brought  that  back  down  to  my 

11  office,  a  small  copy  of  the  Congressional  Intelligence 

12  Authorization  Act  of  1986  and  said,  Chris,  you  need  to  be 

13  aware  of  this.   He  said,  this  impacts  on  this  particular 

14  mission. 

15  Q    In  what  way? 

16  A    In  that  he  said  that  congressional  notification  is 

17  required,  he  said,  on  any  shipment  of  arms  over  a  million 

18  dollars.   He  said,  this  is  clearly— and  we  had  determined 

19  the  price  within  the  first  couple  days,  so  by  the  time  we 

20  had  gone  to  see  Tom  the  price  already  was  well  in  excess  of 

21  several  millions  of  dollars,  and  he  said  this  clearly  meets 

22  that  requirement. 

23  He  offered  to  do  the  notification  for  us  to 

24  establish  points  of  contact  in  the  Congress.   At  that  point, 

25  I  went  to  see  General  Russo  for  guidance  and  counsel.   He 




1  brought  Tom  Taylor  down  to  discuss  it  extensively  with  him. 

2  Within  a  short  number  of  days,  Tom  Taylor  brought  back  to  us 

3  a  paper  that  Mrs.  Crawford,  the  Army  General  Counsel,  had 

4  given  to  the  Secretary  of  the  Army  to  advise  him  that  she 

5  felt  that  notification  was  a  legal  requirement. 

6  Gen.  Russo  then  asked  me  to  take  that  paper  down 

7  to  Ma j .  Gen.  Sutter,  who  at  the  time  was  the  Army's  Deputy 

8  Principal  Lawyer,  the  Assistant  Staff  Judge  Advocate 

9  General.   After  Gen.  Sutter  looked  at  it,  I  also  was  asked 

10  to  take  it  to  Gen.  Brown,  the  Director  of  the  Army  Staff. 

11  And  later  I  know  that  it  also  went  to  Gen.  Cavezza,  the  Aid 

12  to  the  Secretary  of  the  Army. 

13  I  also  know  that  a  meeting  later  was  held  with 

14  Gen.  Russo  and  other  Army  principals  where  they  discussed 

15  notification  at  length  at  the  most  senior  levels  of  the 

16  Army. 

17  Later  I  was  involved  at  the  end  of  the 

18  notification  issue  when  it  was  surfaced  to  Gen.  Powell,  at 

19  the  time.  Ma j .  Gen.  Powell,  the  Aid  to  the  Secretary  of 

20  Defanse.   In  a  memorandum  that  I  was  asked  to  type,  which  I 

21  kept  Gen.  Russo's  handwritten  notes  from  the  meeting  of  his 

22  meeting  with  Gen.  Powell  that  day.  Gen.  Powell  was  asking 
2  3  Gen.  Russo  to  reassure  the  Secretary  of  the  Army  that 

24  notification  was  being  handled  at  the  level  higher  than  an 

2  5  outside-of-Department-of-Army,  and  that  it  had  been 





1  addressed,  and  it  was  taken  care  of. 

2  Q    Major,  if  I  understand  your  testimony,  you  are 

3  saying  then  that  from  the  earliest  days  the  issue  of 

4  congressional  notification  was  flagged;  that  Secretary  Marsh 

5  weighed  in  on  it;  Gen,  Brown,  the  Director  of  the  Army 

6  Staff,  Gen.  Russo,  the  Army  General  Counsel,  and  that  on  at 

7  least  one,  if  not  more,  occasions  one  or  more  of  these 

8  individuals  communicated  directly  to  Gen.  Collin  Powell, 

9  Secretary  Weinberger's  Military  Assistant,  to  see  that  the 

10  issue  of  congressional  notification  was  identified  and 

11  examined  by  appropriate  authorities  above  the  D^  level.   Is 

12  that  correct? 

13  A    Yes,  sir,  that  is  correct.   In  fact,  there  was 

14  great  concern  at  the  Army  level  about  the  notification 

15  issue.   In  addition,  I  took  a  copy  of  the  Intelligence 

16  Authorization  Act  to  my  counterpart  in  the  Agency,  and  he 

17  also  from  his  end  reassured  me  that  the  Agency  was  executing 

18  its  legal  responsibilities  with  respect  to  notification. 

19  MR.  KREUZER:   You  said  something  about  Gen.  Powell 

20  was  asking  Gen.  Russo  to  reassure  the  Secretary  of  Defense 

21  that — 

22  THE  WITNESS:   No,  the  Secretary  of  Army. 

23  MR.  KREUZER:   Or  the  Secretary  of  Army,  that 

24  notification  was  being  made? 

25  THE  WITNESS:   Was  being  handled,  sir. 





1  MR.  KREUZER:   Was  being  handled. 

2  THE  WITNESS:   That  the  issue  had  been  addressed, 

3  and  was  being  taken  care  of. 

4  MR.  KREUZER:   I  see.   And  so  did  he  in  fact,  did 

5  Gen.  Powell  in  fact  do  that,  do  you  know? 

6  THE  WITNESS:   Sir,  the  memo  that  I  typed  for  Gen. 

7  Russo,  which  was  from  his  handwritten  notes,  made  no  mention 

8  of  the  fact  that  DoD  was  going  to  do  a  notification;  only 

9  that  Gen.  Powell  for  the  SECDEF  wanted  Mr.  Marsh  reassured 

10  that  the  issue  had  been  addressed  at  DoD  level. 

11  BY  MR.  SAXON:   (Resuming) 

12  Q    To  your  knowledge,  Maj .  Simpson,  were  you  ever 

13  told,  or  was  anyone  at  the  DA  level  every  told,  that  this 

14  issue  had  been  handled  in  a  manner  of  informing  the 

15  Congress,  that  it  resulted  in-- 

16  A    Was  I  ever  told  by  anybody  at  the  DA  level? 

17  Q    Yes. 

18  A    No,  sir,  I  was  not. 

19  Q    Were  you  ever  made  aware  of  the  requirement  on  the 

20  TOW  nlssiles  being  handled  in  order  to  replenish  Israeli  TOW 

21  stocks  which  had  gone  to  Iran  in  late  '85? 

22  A    No,  sir,  I  was  not.   I  became  aware  of  that  from 

23  reading  the  public  papers  much  after  November  of  '86. 

24  Q    Did  you  yourself  ever  at  any  time  deal  with  the 

25  Israelis? 





1  A    No,  sir,  I  did  not  myself  deal  with  them.   I  do 

2  know  that  my  boss-now-retired  j'eff  Stevens  had  had  occasion 

3  on  a  number  of  different  matters  to  deal  with  the  Israeli 

4  Government . 

5  Q    But  as  far  as  you  know,  matters  unrelated  to  those 

6  before  this  Committee? 

7  A    Yes,  sir. 

8  Q    Did  you  ever  have  any  contact  on  these  matters 

9  with  Noel  Koch,  K-o-c-h? 

10  A    No,  sir.   That  name  isn't  familiar  to  me. 

11  Q    Did  you  ever  have  any  dealings  on  these  matters 

12  with  Glen  Rudd,  the  Deputy  Director  of  the  Defense  Security 

13  Agency? 

14  A    No,  sir,  I  did  not. 

15  Q    Did  you  ever  have  any  dealings  on  these  matters 

16  with  Dr.  Henry  Gafney,  the  Director  of  Planning  for  DSAA? 

17  A    No,  sir,  I  did  not. 

18  Q    Are  you  aware  that  under  foreign  military  sales, 

19  FNS  sales,  the  cheapest  the  United  States  had  ever  sold  a 

20  basic  TOW  missile  for  was  $6800? 

21  A    No,  sir,  I  wasn't  aware  of  the  specific  details, 

22  but  I  am  generally  familiar  with  FMS  pricing  policy. 

23  Q    Let  me  ask  you  a  question  or  two  about  the  checks 

24  which  the  Army  received  from  the  CIA  as  reimbursement,  or 
2  5  payment  for  these  weapons  systems  which  were  transferred. 





1  What  do  you  recall  the  amounts  being  for  those 

2  checks? 

3  A    Sir,  as  I  recall,  the  sum  of  money  was  about  $5.5 

4  million.   As  I  recall,  I  received  from  the 

5  H^^^^^^^^^^^^^^H  CIA,  them 

6  came  out  to  $999,999. 

7  Q    Did  you  ever  ask  why  the  checks  were  cut  in  that 

8  amount? 

9  A    Yes,  because  again  I  was  keeping  in  mind  the 

10  advice  I  had  had  from  the  earliest  days,  to  keep  the 

11  paperwork  to  an  absolute  minimum.   I  was  concerned  about  the 

12  audit  trail  of  six  checks,  as  opposed  to  one.   Anc 
^^^^^^^^^^^^^^^^^^^^^^^^^^H^^^^^^^^^^^B  explained  to 

14  me  that  there  were  computer  problems  and  that  they  could 

15  only  program  a  check  up  to  a  certain  amount. 

16  Q    Did  he  explain  that  there  might  be  a  reason  for 

17  them  only  to  program  a  check  up  to  one  penny  short  of  a 

18  million  dollars — 

19  A    No,  sir,  they  didn't. 

2  0  Q    — because  if  they  exceeded  a  million,  they  would 

21  hav«  to  notify  Congress? 

22  A    No,  sir,  they  did  not. 

23  Q    Did — 

24  A    Again,  if  I  had  heard  that  I  would  have  been 

25  especially  sensitive  to  it,  because  the  checks  were  coming 






























in  at  the  end  of  the  mission  where  we  had  had  so  much 
concern  about  notification  at  the  beginning.   Had  that  issue 
surfaced  in  the  end,  I  would  have  again  immediately  gotten 
bac)c  to  General  Counsel  and  asked  for  some  guidance  and 
reaction.     ^^^^^^^^^^^^^^^^^^^^ 

Oic^^^^^^^^^^^^^^^^^^^Bat  the       ever 
you  that  he  had  been  at  the  White  House  for  a  meeting  on 
January  18th  with  Admiral  Poindexter,  Col.  North,  Clair 
George,  and  Stanley  Sporkin,  the  General  Counsel  of  the  CIA? 

A    Sir,  he  never  told  me  that,  although 
and  I  have  spoken  before,  and  I  knew  he  was  dealing  with 
principals  over  there,  but  I  did  not  know  any  of  the  names. 

Q    Did  he  ever  tell  you  that  his  point  of  contact  at 
the  White  House  or  the  NSC  was  Col.  Oliver  North? 

A    No,  sir,  he  did  "ot^^^^^^^^^ 

Q    Were  you  aware  that^^^^^^^Vtold  Gen.  Russo 
that  the  price  of  $6000  per  TOW,  which  apparently  Gen.  Russo 
had  provided  him  as  a  working  figure  early  on,  was  too  high? 

A    Was  I  ever  aware  that  he  told  him  that  it  was  too 
high?  No,  sir,  I  wasn't. 

Q    Were  you  aware  that  Col.  North  told| 
that  $6000  per  TOW  was  too  much? 

A    No,  sir,  I  did  not.   I  do  feel  there's  an  answer  I 
could  provide  here  that  might  clarify  matters  for  you. 






1  A    I  do  believe  that  when  Gen.  Register,  the  Army 

2  Deputy  Chief  of  Staff  for  Logistics,  talked  to  me  the  first 

3  day  that  he  had  the  thought  that  the  price  would  be  higher 

4  than  it  turned  out  to  be  for  a  basic  TOW.   And  the  numbers 

5  that  he  had  provided  to  me,  which  was  around  $4000 ^  once  we 

6  had  communicated  that  lower  price  to  the  Agency  in  the  early 

7  days  of  the  mission,  then  the  number  went  up  very  quickly  in 

8  terms  of  the  number  of  missiles  that  they  were  asking  for. 

9  And  I  think  that  has  a  bearing  here. 

10  Q    Okay.   Did  Gen.  Russo  ever  tell  you  that 

11  ^^^^^^^had  told  him  to  find  the  oldest  TOWs  that  existed  in 

12  the  Army  warehouses? 

13  A    Sir,  I'm  not  sure  about  that.   That  might  be  true. 

14  I'd  have  to  go  back.   I've  kept  an  awful  lot  of  detailed 

15  notes  on  this  mission.   I'd  have  to  go  back  and  study  those 

16  to  provide  you  a  better  answer. 

17  Q    Did^^^^^^^^Hever  tell  you  that  Col.  North  had 

18  checked  with  the  Marines  on  TOW  prices? 

19  A    No,  sir,  he  did  not. 

20  Q    Did^^^^^^^^Hever  tell  you  that 

21  told  him  to  avoid  the 

22  A    Yes,  sir,  he  did.   That  was  very  much  a  concern, 

23  again,  from  the  first  time  I  spoke  toj 
2  4  ^^^^^^^1  because  he  knev^^^^^^^^^^Band  I  from  prior 
25  extensive  dealings  with  each  other  and  knew  well  what  the 





























rules  were  on  our  support  to  the  Agency.  That  was  almost 
the  first  five  minutes  of  our  discussion  the  first  day  we 
met,  was  not  to  deal  with  any  of  the  people  in  the] 

And  it  was  specifically  addressed  by  name  as  the 

A    Yes.  ^^^^^^^^^Kknev   well  what  that  was. 

Q    Do  you  have  any  knowledge  that  Gen.  Russo  dropped 
the  price  from  $6000  per  TOW  to  $3400  per  TOW  on  the  first 
day  that^^^^^^^^^lwas  involved  because  of  a  call  Gen. 
Russo  received  froo 

A    Sir,  I  would  have  to  say  that  has  to  be  absolutely 
untrue,  because  in  fact  Gen.  Russo  was  out  of  town  when  this 
mission  got  started,  and  I  already  had  provided  the  basic 
price  of  $3169  to  Gen.  Register.   Gen.  Russo  didn't  pick  up 
the  mission  for  several  days,  and  it  wasn't  until  a  couple 
of  weeks  after  that  that  I  surfaced  to  him  from  the  bottom 
up  the  fact  that  we  needed  to  add  $300  more  to  the  price, 
bringing  it  up  to  about  $3469. 

Q    The  requirement  for  that  was  due  to  the  safety 

A    Yes,  which  were  surfaced  to  me  from  MICOM 
headquarters.   So  it  was  absolutely  a  matter  of  the  field 
surfacing  to  the  Army  leadership,  and  not  vice  versa. 

Q    Let  me  ask  a  question  or  two  about  the  readiness 






























impact  of  meeting   the  TOW  requirement — excuse   me,    the   HAWK 
repair  parts   requirement. 

A  Okay,    we're   on  HAWKs,    now,    sir? 

Q  Yes.      Did  you   ever  tell^^^^^^^^^Vof  your 

concern   about   the   readiness   impact   of  providing   all    234 
items   requested   for  the  HAWK  repair  parts? 

A  Yes,    sir,    I   did. 

Q    And  what  was  his  response? 

A    His  response  was  that  that  was  what  they  needed. 
But,  sir,  that  again  is  not  such  a  simple  matter.   Gen. 
Russo  and  I  personally  chopped  the  list  down.   Using  the 
vernacular,  that  means  we  reduced  the  number  of  critical 
items  that  would  have  an  impact  on  Army  readiness. 

I  would  point  out,  and  it  is  of  concern,  that  the 
principal  number  of  items  that  the  Agency  was  asking  for  on 
HAWKs  were  of  an  older  model  called  Pre-Phase  II  PIP 
configured  radars. 

Q    If  I  understand  what  you're  saying,  you  and  Gen. 
Russo  were  concerned  about  the  readiness  impact  on  certain 
parts,  and  sought  to  not  meet  the  requirement  as  to  a 
certain  number  of  parts.   Is  that  correct? 





1  A    Yes,  sir,  that  is  correct . 

2  Q    And  in  fact  did^^^^^^^^^Bre instate  those  parts 

3  and  say  in  essence  that  you  would  have  to  provide  them 

4  anyway? 

5  A    Sir,  there  was  give-and-take  on  that.   The  numbers 

6  that  I  had  chopped  down  for  him  on  some  that  he  came  back, 

7  there  was  a  critical  question  that  Gen.  Russo  asked  me  to 

8  ask^^^^^^^^H early  on.   Early  on,  the  question  that  I  was 

9  to  ask  him  was,  were  they  just  buying  these  items  to  put  on 

10  the  shelf?  Or  were  they  buying  these  parts  to  replace 

11  damaged  equipment?  ^^^^^ 

12  The  answer  that  came  back  from^^^^^^^Hseveral 

13  days  later  was  that  they  were  buying  the  parts  to  replace 

14  damaged  equipment.   And  that,  then,  affected  the  Army 

15  assessment  of  whether  or  not  to  support.   Even  after  that, 

16  though — and  you  and  I  had  extensive  discussions  on  this  in 

17  April — the  technicians  assisting  us  in  assessing  Army 

18  capability  to  support  this  project  felt  that  some  of  the 

19  numbers  were  wrong.   That  is,  that  some  of  the  parts  that 

20  thay  had  requested  would  have  been  supporting  about,  as  I 
recall, ^^^^^^^^^Hj^H  and  some    the  repair  parts, 

22  of  the  technicians  felt,  would  have  supported  a  number  far 

2  3  in  excess  of  that. 

24  So  again,  it  was  a  complex  matter,  and  there  was 

2  5  give-and-take  on  the  list  as  we  reduced  the  items  they  were 





1  asking  for,  sometimes  just  because  they  didn't  make  sense. 

2  And  other  items  were  we  could  not  afford  to  give  them  all 

3  that  they  asked  for. 

4  Q    But  while  there  was  some  give-and-take,  were  there 

5  any  items  that  you  and  Gen.  Russo  would  have  preferred  not 

6  to  transfer  to  the  CIA  which^^^^^^^^H insisted  you 

7  transfer? 

8  A    Yes,  sir,  there  were  a  small  number  of  items  that 

9  we  in  fact  gave  them  slightly  more  than  we  had  originally 

10  chopped  the  list  down  on. 

11  Q    And  how  many  would  you  say  that  would  be? 

12  A    To  my  best  recollection,  and  again  I've  got  my 

13  notes  on  it,  there  were  probably  about  6  items  out  of  that 

14  whole  list  of  234  that  we  gave  them  more  than  we  intended, 

15  after  reviewing  the  criticality  of  the  items. 

16  Q    And  those  would  have  been  items  which  you  would 

17  have  preferred  not  to  surrender  due  to  the  readiness  impact? 

18  A    Yes,  sir.   And  it  might  not  necessarily  have  been 

19  the  readiness  impact  on  U.S.  forces,  but  the  readiness 

2  0  impact  on  some  of  our  FMS  customers  where  they  owned  these 

21  older  systems  and  might  be  coming  in.   I  would  also  mention, 

2  2  I  think  it  is  important  here,  that  we  offered,  and  it  was  a 

23  more  sensible  alternative  offered  by  the  U.S.  Army  Missile 

2  4  Command,  to  in  fact  bring  the^^^^^^^l systems  back  to  the 

25  Army's  overhaul  facility.   We  felt  that  it  would  not  only  be 





























cheaper,  but  much  easier  to  resupply  and  maintain  in  the 
future  to  modernize  the ^^^^^^Hsy stems  to  something  we 
called  Post-Phase  II  PIP  configured,  which  would  then  have 
made  it  easier  for  them  to  both  maintain  and  operate  the 
systems  in  the  future. 

They  would  have  also  had  a  better  capability,  a 
state-of-the-art  capability. 

Q    We  will  talk  about  that  in  more  detail  later.   For 
now,  that  was  not  done,  even  though  the  Army  suggested  it? 

That  was  not  done.   The  offer  was  not — yes,  sir. 
The  offer  was  not  taken  up  by  the  Agency. 
Was  declined.   The  offer  was  declined  by  the 



Agency . 

Q  Were  you  ever  told  by  anyone  that  the  decision  to 
delete  the  radars,  the  tw<^^^^^^^^Hradars ,  was  made  by 
the  White  House? 

A    Was  I  ever  told  the  decision  was  made  by  the  White 
House?  No,  sir.   That  was  a  twisted  and  sordid  affair,  as 
you  may  recall  from  our  prior  testimony.   I  had  done  a  great 
deal  of  work  for^^^^^^^^f  in  finding  out  the 
availability.   As  you  recall,  I  had  told  you  that 

It  turned  out  they  were  property  of  the  Iranian 
Government,  and  that  I  had  told^^^^^^^H that  both  the 
Treasury,  the  White  House,  and  the  State  Department,  as  well 





1  as  the  Defense  Department,  and  a  number  of  agencies,  all 

2  needed  to  be  involved  in  the. release  of  that  equipment.   He 

3  was  very  concerned  that  I  had  gone  and  done  this  work, 

4  although  he  had  vigorously  told  me  to  go  ahead  and  ask  to 

5  procure  them. 

In  was     boss,  ^^^^^^^^^^^^^H  that 

7  called  my  boss.  Gen.  Russo,  to  complain  about  the  fact  that 

8  we  were  "making  noises"  so  to  speak,  about  the  items,  and 

9  asked  us  to  cease  and  desist  immediately. 

10  And  of  course,  hypocritically,  they  turned  around 

11  on  that  just  a  couple  of  weeks  later  and  asked  us  to  go  and 

12  inspect  them  for  readiness  capability;  and  in  fact  provided 

13  funds  to  do  that.   But  I  never  did  hear  an  answer — a  short 

14  question  with  a  long  answer — I  never  heard  the  White  House 

15  mentioned  as  the  activity  that  asked  us  to  back  off. 

16  Q    And  just  for  the  record,  you  were  never  told  that 

17  Col.  North  himself  made  the  decision  to  delete  the  radars? 

18  A    No,  sir,  I  did  not. 

19  Q    All  right.   That  completes  what  I  would  want  to 

20  run  through  as  sort  of  some  overview,  or  sort  of  bottom-line 

21  questions. 

22  Roger,  do  you  have  anything  in  that  category 

23  before  we  start  to  another  one? 


25  BY    MR.     KREUZER: 





1  Q    The  discussions  that  you  had  with  Gen.  Russo,  you 

2  went  to  the  AMDF.   You  found  the  first  price  of  $3169,  and 

3  you  conveyed  that  information  to  Gen.  Russo? 

4  A    Yes,  sir,  that  is  correct. 

5  Q    And  he  said,  okay,  in  essence? 

6  A    Well,  by  the  time  Gen.  Russo  got  involved,  we  had 

7  already  established  the  price  and  given  it  to  Gen.  Register, 

8  his  boss.   Gen.  Russo  was  picking  up  the  mission  several 

9  days  later.  That  was  already  something  that  had  already — 
that  event  had  already  passed  by  the  time  Gen.  Russo  took 

So  then  later  there  was  a  question  of  the  MOIC 

Yes,  sir,  several  weeks  later. 

And  you  had  to  go  back  with  it  to  Russo  the  next 

Yes,  sir. 

— since  he  had  taken  over,  and  say  we  have  to 

19  adjust  this  price  to  $3469 — 

20  A    Yes,  sir. 

21  Q    — because  of  the  MOIC.   And  what  did  he  say  then? 

22  A    Gen.  Russo  wanted  to  know  what  in  the  hell  a  MOIC 

23  was.   Neither  one  of  us  knew  what  it  was  at  the  time.  We 

24  had  to  have  a  detailed  technical  explanation  provided  of 

25  exactly  what  this  small  electrical  apparatus  was  going  to 



that  ev 




















1  do. 

2  Q    So  ultimately  once  the  discussions  took  place  and 

3  he  learned  about  what  the  MOIC  was,  did  he  say,  okay,  in 

4  essence,  this  is  all  right? 

5  A    Well,  of  course  he  did.   The  objective  was  that  we 

6  had  to  go  back  to  the  Agency  to  tell  them  that  additional 

7  funding  was  required  which,  as  you  may  recall,  caused  a  lot 

8  of  consternation  at  the  time. 

9  Q    And  that  was  not  the  only  time,  I  guess. 

10  Q    That's  true.   That  wasn't  the  only  time  that  we 

11  changed  the  price  on  them,  based  again  on  information  being 

12  fed  from  the  field  up  to  the  leadership. 

13  Q    Now  was  there  some — were  you  aware  of  some 

14  discussion  between  the  people  at,  let's  see,  who  was  it, 

15  Col.  Lincoln  or  Mr.  Chris  Leachman,  and  Gen.  Russo  about 

16  $3469  being  too  low  a  price?  Are  you  aware  of  any 

17  discussions  they  had  with  them,  or  arguments? 

18  A    Sir,  I  don't  recall  that  Col.  Lincoln  or  Chris 

19  Leachman  ever  talked  with  Gen.  Russo.  They  did  speak  with 

20  me,  and  one  of  the  generals  at  Missile  Command  did  speak 

21  with  Gen.  Russo;  but  the  discussions  on  pricing  that  Mr. 

22  Leachman  and  Col.  Lincoln  had  were  always  with  me.   I  don't 

23  think  either  one  of  those,  Chris  Leachman  or  Col.  Lincoln 

24  ever  talked  to  Gen.  Russo  about  prices,  not  to  my  knowledge. 

25  Q    Are  you  ^WATf  of  the  discussions  that  Col.  Russo 

aware  ot  tne  discussions 




1  did  have  with  Lincoln  and  Leachman's  boss,  the  General? 

2  A    Sir,  I  was  generally  aware  I  think  that  Gen.  Russo 

3  generally  had  a  discussion  with  the  Deputy  Commanding 

4  General  at  Missile  Command,  and  I  am  generally  aware  of  what 

5  the  outcome  of  that  discussion  was. 

6  The  outcome  was  that  there  had  been  a  lot  of 

7  technical  discussions  on  the  whys  and  wherefores  of 

8  different  years  and  different  prices  of  different  shipments, 

9  and  Gen.  Russo  said  he  did  not  want  the  bureaucracy  to  run 

10  the  risk  of  damaging  the  mission,  and  he  was  going  to  leave 

11  the  prices  as  set. 

12  Q    So  did  you  hear  of  what  price  the  General  at 

13  Missile  Command  was  advancing  to  Gen.  Russo?   Did  you  have 

14  any  knowledge  of  that? 

15  A    I  know  it  was  one  of  the  higher  prices,  but  not 

16  specifically  the  details. 

17  Q    And  Gen.  Russo  said  in  essence,  it  is  $3469? 

18  A    Roger.   By  that  time  we  had  already  gone  through 

19  several  other  iterations  on  changings  in  price,  and  Army 

20  ancillary  costs.   I  think  Gen.  Russo  was  a  little  bit 

21  concerned  about  changing  truth,  and  just  kind  of  said  let's 

22  leave  it  be  and  let's  go  with  what  we  have  now. 

23  MR.  KREUZER:   Okay.   Thank  you. 


25  BY  MR.  SAXON:   (Resuming) 






























Q    All  right.  Major,  I  think  it  may  be  helpful  from 
the  outset  to  have  you  elaborate  a  bit  on  something  I  asked 
you  about  previously,  which  we  will  spend  a  good  of  time 
discussing,  and  that  is  the 

Off  the  record  a  minute. 

[Discussion  off  the  record.] 

BY  MR.  SAXON:   (Resuming) 
Q    Back  on  the  record. 

A    Sir,  just  briefly,  and  if  I  get  too  elaborative, 
just  cut  me  off,  not  knowing  where  you  need  the — 

the  result  of  Secretary  of 
the  Army's  concerns  that  there  were  a  large  number  of 
classified  programs  and  activities  going  on  in  the  Army  over 
which  he  did  not  have  full  visibility.   Some  of  these 
concerns  were  accentuated  by  the  fact  that  there  had  been  a 
Department  of  Justice  investigation  of  some  ODCSOP,  Office 
of  the  Deputy  Chief  of  Staff  for  Operations. 

Q    Would  that  have  included  what  we  have  come  to  know 
as  "Yellow  Fruit"? 

A    Yes,  sir.   As  a  result  of  the  outcome  of  the 

'"  T 













investigation,  several  Army  colonels  were  received  in 
ODCSOP,  and  the  Secretary  did  not  feel  he  had  as  full 
visibility  as  he  should  over  some  of  the  details  of  the 
classified  operations. 

A    Ves,  sir,  that  is         ^^^^^^^^^^ 
Q    You  said  it  was  "the"^^^^^^^^^^B  for 

handling  transfers  to  the  CIA,  and  requests  from  the  CIA. 

In  your  judgment,  would  it  have  been  the  only,  or  the 
Ifor  such  requests': 
A    Sir,  it  was  the  exclusive  office! 

Q    Were  you  there  at  the  time  it  was  created? 

A    Yes,  sir,  I  was. 

Q    And  you  had  dealt  with  that  office? 





























Extensively,  on  a  daily  basis  for  almost 
Iby  the  time  we  got  to  September — or  by  the  time 
we  got,  excuse  me,  to  January  1986. 

Q    And  to  make  sure  I  understand  what  you  testified 
to  earlier  this  morning,  I  believe  you  told  us  in  the 
interview  in  April  that  there  were  a  few  instances  in  which 
transfers  to  other  agencies  would  go  outside  of  the 

A    Yes,  sir.   As  a  matter  of  fact,  with  respect  to  my 
white  world  job,  I  think  I  want  to  separate  my  dealings  with 
the ^^^^^^^^^^^^^H exclusively  concerned  my  black  world 
job.   And  although  I  worked  on  other  covert  activities, 
there  were  other  established  DoO  and  DA  channels  for 
receiving  these  support  requests,  and  I  in  no  way  interfaced 

the^^^^^^^^^^^^^^^^^^^^^^fon  those 

Q    So  it  is  perhaps  possible  that  transfers  to  other 
agencies  went^^^^^^^^^H-excuse  me,  that  transfers  went 
f roa  OA  to  other  agencies  without  going^^^^^^^^^^H  But  as 
far  as  you  know,  no  black  world  or  covert  transfers  took 
place  to  the  CIA  outside^^^^^^l  Is  that  correct? 

A    No,  sir. 

I  think  it  is  also  important — I  would  like  to 
elaborate  just  very  shortly — to  say  that  on  the  requests 





























where  we  did  provide  Army  material  to  other  agenciesi 

they  were  always  done 
with  Army  General  Counsel's  written  support,  and  always  with 
a  written  approval  of  the  Secretary  of  the  Army. 

Q    And  you  did  not  follow  those  procedures  in  this 
case?   Is  that  correct? 

A    No,  sir.   The  procedures  involved  in  supporting 
the  TOW  missiles  and  the  HAWK  parts  went  outside  all  of 
these  established  channels. 

Q    And  at  the  time  the  TOW  requirement  was  imposed  on 
who  was  the  hea^^^^^^^^^^^^^^^^^^^^^^^H 

Sir,^^^^^^^^^^^^^^^^^^^^^^^^^p'as  the 

Q    Roughly,  when  did  he  depart? 

A    Sir,  to  the  best  of  my  knowledge,  he  left  just 
about  the  time  I  did  in  the  early  spring  of  1986. 
Q    And  who  was  his  replacement? 

A  gentleman,  I  can't  remember  his  name. 
Would  that  be  I 
Yes,  sir. 

If  you  would,  start  at  the  beginning  of  your 
involvement  with  and  knowledge  of  the  TOW  missile 
requirement,  wherever  that  would  have  been,  in  January.   And 
if  you  would,  simply  walk  us  through  what  happened,  how  you 
found  out,  who  called  you,  and  who  said  what,  what  you  did, 





1  et  cetera. 

2  A    Sir,  my  involvement  began  on  a  Saturday  morning  in 

3  late  January.   I  believe  it  was  around  the  20th  of  January. 

4  Col.  Lapasota,  who  was  the  Executive  Officer  to  the  Army 

5  Deputy  Chief  of  Staff  for  Logistics,  Gen.  Register — 

6  Q    And  that  would  be  Gen.  Benjamin  Register? 

7  A    Gen.  Benjamin  Register,  yes,  sir. 

8  Q    And  spell  Lapasota. 

9  A    L-a-p-a-s-o-t-a.   He  is  now  Gen.  Lapasota.   He  is 

10  now  Chief  of  Planning  and  Operations  in  the  Office  of  the 

11  Deputy  Chief  of  Staff  for  Logistics. 

12  Q    Excuse  me.   You  said  Colonel? 

13  A    Col.  Lapasota,  then,  is  now  Gen.  Lapasota,  and  he 

14  is  now  the  Chief  of  Plans  and  Operations  for  ODCSLG. 

15  Q    And  he  called  you? 

16  A    He  called  me  at  the  behest  of  Gen.  Register.   He 

17  said  Gen.  Register  is  in  his  office,  and  he  would  like  you 

18  to  leave  your  house  immediately  and  come  directly  into  the 

19  office  to  see  him. 

2  0  I  immediately  went  into  the  office.   I  got  there 

21  about  30  minutes  later.   Col.  Lapasota  did  not  know  why  Gen. 

22  Register  wanted  to  see  me,  except  that  the  DCSLG  office  was 
2  3  activated,  and  Col.  Lapasota  was  acting  as  the  support 

24  officer,  which  was  his  normal  role. 

25  I  went  in  to  see  Gen.  Register  with  the  doors 






























Q    Let  me  ask,  for  the  record,  while  there  are  a  lot 
of  things  you  told  us  in  April  were  unusual  about  the  TOW 
and  HAWK  missile  request,  I  believe  you  also  told  us  that  it 
was  not  unusual  for  you  as  an  Army  Major  to  be  dealing  with 
the  Deputy  Chief  of  Staff  for  Logistics,  or  other  senior 
people  at  DCSLG.   Is  that  correct? 

A    Yes,  sir,  that  is  correct.   I  dealt  with  Gen. 
Russo  daily,  and  I  saw  Gen.  Register  frequently. 

Q    Okay.   Continue. 

A    Gen.  Register  said  that  that  morning| 
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^H  Gen. 
told  both  of  us  that  that  morning  he  had  received  from  Gen. 
Thurmond — 

Q    And  that  would  be  Gen.  Maxwell  Thurmond? 

A    Maxwell  Thurmond,  the  Army  Vice  Chief  of  Staff, 
had  received  from  him  a  priority  requirement  to  assess  Army 
capability  to  provide  about  4000  TOWs  to  the  CIA  on  very 
short  notice.   At  the  time,  it  was  within  just  a  couple  of 

The  requirement  was  so  urgent  that  Col.  Lapasota, 
although  he  knew  nothing  about  my  mission,  had  been 
instructed  to  have  a  plane  on  standby  down  at  the  field  down 
at  Ft.  Belvoir  to  take  me  any  place  I  might  need  to  go  in 




1  support  of  this  mission.   There  was  some  thought  on  Saturday 

2  I  might  need  to  go  down  to  Army  Missile  Command  Headquarters 

3  to  expedite  support  of  the  mission. 

4  Q    And  where  is  Army  Missile  Support? 

5  A    That  is  at  Redstone  Arsenal,  Alabama. 

6  Q    And  that  is  also  referred  to  as  MICOM? 

7  A    Yes,  sir.   MICOM  is  the  common  abbreviation  for 

8  Missile  Command. 

9  Q    All  right.   Continue. 

10  A    The  requirement,  as  Gen.  Register  conveyed  it  to 

11  me,  was  again  to  provide  about  4000  basic  vanilla  TOWs.   A 

12  vanilla  TOW,  for  the  record,  is  an  old  model  of  an  Army 

13  tactically  operated  optical  wire-guided  missile,  which  is  a 

14  missile  at  that  time  that  had  a  range  of  about  3000  meters 

15  and  was  kind  of  a  "tank  killer"  as  it  were. 

16  Gen.  Russo  said,  I  am  going  to  wait  in  my  office. 

17  He  says,  do  you  have  any  points  of  contact  at  MICOM?   I  had 

18  said,  yes,  I  knew  Col.  Lincoln  from  a  previous  mission  that 

19  I  had  worked  on,  who  was  the  Chief  of  the  Army's  TOW  Project 

20  Management  Office,  the  office  responsible  for  dealing  with 

21  contractors'  design  and  development  of  missiles. 

22  I  called  Col.  Lincoln.   I  got  in  touch  with  him  on 

23  Saturday. 

24  Q    Now  before  you  go  into  your  discussion  with  Col. 
2  5  Lincoln,  let  me  back  you  up  a  moment  and  ask  you  what  the 



u^WmHUVIIS  II.U  37 

1  specific  guidance  was  that  you  received  from  Gen.  Register 

2  in  terms  of  how  this  transaction  should  be  handled,  who 

3  should  you  tell,  what  kind  of  notes,  et  cetera? 

4  A    The  guidance  I  got  from  Gen.  Register  was  one  that 

5  the  entire  DoD  staff  that  was  involved  in  this  was  a  very 

6  tiny  handful  of  people;  that  it  was  as  sensitive  a  mission 

7  as  I  had  ever  worked  on;  that  I  was  to  keep  paperwork  to  an 

8  absolute  minimum;  and  to  keep  the  number  of  people  I 

9  involved  to  an  absolute  minimum  necessary  to  accomplish  the 

10  mission. 

11  Q    Were  you  asked  if  in  fact  it  would  be  possible  for 

12  you  to  deal  with  a  single  individual  at  Redstone? 

13  AX  believe  that  I  was,  sir.   And  although  we 

14  thought  that  was  initially  capable,  it  turned  out  not  to  be 

15  true  as  time  went  on. 

16  Q    And  were  you  shown  any  reguests  in  writing  from 

17  the  CIA,  on  CIA  letterhead,  as  you  would  have  normally  had 

18  for  one  of  your  reguests? 

19  A    No,  sir.   As  a  matter  of  fact.  Gen.  Register  said 

20  a  major  departure  from  our  normal  procedure  would  be  that 

21  thare  would  be  no  staffing  paperwork  on  this  mission. 

22  Rather,  that  I  would  deal  with  the  same  principals  that  I 

2  3  deal  with  to  get  a  mission  approved;  but  I  would  do  all  of 

24  it  by  verbal  coordination. 

25  Q    Did  Gen.  Register  say  from  whom  Gen.  Thurmond  got 




1  this  requirement? 

2  A    Not  at  that  time,  sir;  but  I  understood  clearly 

3  later  on  that  it  came  dovm  from  the  Office  of  the  Secretary 

4  of  Defense. 

5  Q    At  what  point  do  you  think  you  would  have  been 

6  told  that? 

7  A    Oh,  about  the  time  we  started  to  discuss  the 

8  pricing  issue.   I  was  very  well  aware,  as  we  started  to 

9  discuss  the  pricing  issue,  that  those  decisions  and 

10  requirements  were  coming  from  the  Office  of  the  Secretary  of 

11  Defense,  and  I  knew  that  Gen.  Powell  was  acting  for  Mr. 

12  Weinberger. 

13  Q    Correct  me  if  I  approach  something  like  putting 

14  words  in  your  mouth,  but  is  it  safe  to  say  that  while  this 

15  request  was  unusual  in  many  regards,  that  from  the  outset 

16  there  was  no  doubt  about  its  legitimacy  or  that  it  was 

17  passed  on  by  appropriate  Amy  individuals  at  the  highest 

18  levels? 

19  A    Sir,  there  was  never  any  doubt  in  my  mind.   I  was 

20  dealing  with  people  who  I  had  heard  their  names  frequently, 

21  and  the  people  within  the  Army  I  was  dealing  with  I  had 

22  dealt  with  extensively  for  2-1/2  years  by  this  time,  so 
2  3  there  were  no  surprises,  no  new  faces,  and  I  certainly 

24  attached  legitimacy  to  the  mission  because  of  that. 

25  Q    Tell  us  then  about  your  conversation  that  first 



-  .«  39 

1  day  with  Col.  James  Lincoln  at  MICOM. 

2  A    Sir,  Col.  Lincoln,  who  I  will  just  refer  to  after 

3  this  as  the  TOW  Project  Manager,  the  TOW  PM,  said  that  that 

4  was  an  unusual  thing,  because  here  I  have  Gen.  Register  the 

5  DCSLG  of  the  Army  waiting  in  his  office  for  me  to  see 

6  whether  or  not  we  can  provide  about  4000  TOWs  on  very  short 

7  notice,  as  early  as  within  three  days.   For  the  record,  this 

8  was  a  very,  very  short  window  to  make  such  a  major 

9  assessment  of  support  capability. 

10  Col.  Lincoln  said  he  would  go  into  his  office.   He 

11  said  he  would  have  to  do  this  strictly  from  a  records' 

12  review;  that  it  was  almost  impossible  otherwise  than  that  to 

13  assess  it  in  such  a  short  time.   But  he  went  into  his 

14  office.   I  provided  to  him  a  stock  number  for  the  basic 

15  vanilla  TOW. 

16  Q    And  where  did  you  get  that  stock  number? 

17  A    I  got  that  from  a  fellow  in  the  DSLG  missile 

18  office  who  was  working  with  me  that  Saturday. 

19  Q    That  would  be  a  civilian  named  John  Hill? 

20  A    Yes,  sir,  that  is  correct.   And  it  was  from  that 

21  stock  number  that  we  determined  the  price,  which  we  also 

22  gave  to  Col.  Lincoln. 

23  Q    I  believe  you  told  us  that  Mr.  Hill  was  called  in 

24  by  Gen.  Register  to  do  a  check  of  existing  inventories  to 

25  see  whether — 


,ji.iii  ,n    I.  40 

1  A    Worldwide, 

2  Q    — the  need  could  be  met. 

3  A    Yes,  sir. 

4  Q    And  to  provide  you  with  specific  stock  numbers  for 

5  the  basic  vanilla  TOWs.   Is  that  correct? 

6  A    Yes,  sir,  that  is  correct. 

7  Q    But  that  is  more  or  less  the  extent  of  Mr.  Hill's 

8  involvement? 

9  A    That  was  his  only  involvement  with  me,  sir,  after 

10  that. 

11  Q    Okay.   So  you  gave  the  stock  number  for  the 

12  vanilla  TOW  to  Col.  Lincoln? 

13  A    Yes,  sir;  that  is  correct. 

14  Q    And  then  what  happened? 

15  A    He  called  me  back  sometime  after  lunch,  I  would 

16  suspect  before  2:00  o'clock  as  I  recall,  and  said,  Chris,  it 

17  looks  like  we  can  do  that.   He  said,  I  want  to  get  my 

18  regular  folks  in  here  on  Monday  morning,  he  said,  but  he 

19  said,  it  looks  like  we  can  do  it.   He  said,  it  looks  like 

20  I'v«  got  enough  stocks. 

21  He  had  told  me,  at  that  time,  that  he  thought  they 

22  were  down  at  Anniston  Army  Depot,  a  depot  several  hours 
2  3  distant  from  Anniston. 

24  Q    Anniston  Army  Depot  is  within  Alabama,  and 

25  Redstone — 





1  [Simultaneous  question  and  answer.] 

2  A    — in  Alabama,  and  Anniston  Army  Depot,  for  the 

3  record,  belongs  to  Missile  Command  Headquarters.   It  is  one 

4  of  their  subordinate  activities. 

5  I  went  up  and  Gen.  Register,  who  was  still  waiting 

6  in  his  office — it  was  my  understanding  he  was  waiting  to 

7  give  the  answer  back  to  the  Army  leadership  at  that  time. 

8  Q    At  that  point  when  Col.  Lincoln  first  got  back  to 

9  you  to  say  he  thought  the  requirement  could  be  met,  you  did 

10  not  know  that  the  shipments  were  to  be  split  into  the  three 

11  orders?   Is  that  correct? 

12  A    That  is  absolutely  correct,  sir. 

13  Q    Nor  did  you  have  any  reason  at  that  stage  to  know 

14  that  a  safety  modification,  or  MOIC,  would  be  needed?   Is 

15  that  correct? 

16  A    No,  sir. 

17  Q    Okay.   Continue. 

18  A    Once  I  had  told  Gen.  Register  what  Col.  Lincoln 

19  had  advised  me  concerning,  Gen.  Register  gave  me  a  beeper 

20  and  asked  me  to  stay  very  close  hold  the  rest  of  the 

21  weekend.   He  had  Col.  Lapasota  have  the  plane  on  standby, 

22  which  also  was  to  remain  throughout  the  weekend,  and  asked 

23  me,  should  I  leave  the  house  at  any  time,  to  let  him  know. 

24  There  were  no  more  events  that  weekend.   We  picked 

25  up  the  mission  on  Monday  when  two  things  happened,  both  on 




1  Monday  morning.   One  was  that  al 

2  ^^^^^^^^^^^■from  the  CIA  called  me  on  the  phone  and  asked 

3  me  if  he  could  come  over  and  visit  me  in  my  office. 

4  Q    Had  you  ever  had  any  dealings  with  him  prior? 

5  A    Yes,  sir.   I  had  had  some  extensive  dealings  with 

6  ^^^^^^^^^^■^■^  ^^^ 

7  I  knew  him  well.   He  came  over  to  see  me,  told  me  he  was  the 

8  Agency  action  officer  for  the  project  on  which  1  had  been 

9  briefed  on  the  weekend,  and  he  knew  all  of  the  details 

10  concerning  what  I  had  worked  for  Gen.  Register  on  on 

11  Saturday.   And  again,  based  on  my  normal  dealings  with  the 

12  Agency,  I  then  fully  understood  that  he  was  the  main 

13  participant. 

14  Q    At  that  point,  did  this  operation  have  a  code 

15  name,  or  a  nickname? 

16  A    It  didn't  then,  but  I  developed  one  very  shortly 

17  for   it. 

18  Q 

19  A 

20  Q 

21  that  neuBe? 

22  A    To  tell  you  the  truth,  I  looked  out  the  window  and 

23  it  was  snowing  the  day  we  gave  it  the  name.   I  wanted 

24  something  very  innocuous  that  would  not  attract  attention. 

25  Q    For  the  record,  when  we  get  to  the  HAWK  repair 

And  that  was  what? 

I  developed  it  and  called  it  "Project  Snowball." 

Was  there  any  particular  reason  why  you  gave  it 





1  part  condition,  did  you  also  provide  that  its  name? 

2  A    Yes,  sir,  I  did. 

3  Q    What  was  that  name? 

4  A    I  provided  the  project  a  name  called  "Crocus." 

5  Q    And  why  did  you  name  it  that? 

6  A    Because  at  the  time  when  I  looked  out  the  window, 

7  there  were  crocuses  blooming.   I  know  that's  very  amusing, 

8  but — 

9  Q    Okay,  to  go  back  to  your  discussions  with 
^^^^^^H  continue. 

11  A    Sir,  that  morning^^^^^^^Hat  that  time  alerted 

12  me  that  the  first  shipment  could  be  as  early  as  just  a  few 

13  days  from  that,  and  asked  me  that  day  to  work  on  weights  and 

14  cubes  for  a  variety  of  different  aircraft,  including  a 

15  Boeing  Commercial  707,  an  Air  Force  C-140,  and  a  number  of 

16  other  civilian  and  military  aircraft.   There  were  2ibout  five 

17  all  together,  as  I  recall. 

18  The  environment  became  very  dynamic  at  that  point. 

19  He  also  wanted  me  to  determine  the  capability  of  the  runway 

20  down  at  Anniston  to  support  these  different  type  of 

21  aircraft.   That  particular  factor  we  learned  very  guickly 

22  could  not  support  some  of  the  bigger  aircraft,  and  within  a 

23  very  short  time  we  had  decided  that  if  we  were  going  to  do 

24  any  outloading  of  missiles,  we  would  do  it  out  of  the 

25  Redstone  Airfield,  which  was  big  enough  to  acconunodate  all 





1  of  the  different  variety  of  aircraft. 

2  Q    All  right.   We  will  be  told  by  you  later,  I 

3  assume,  that  these  missiles  were  not  actually  airlifted,  but 

4  in  fact  went  by  truck.   But  we  so  understand  now,  in  the 

5  beginning  the  plan  was  for  them  to  be  airlifted  out  of 

6  Anniston  Army  Depot?   Is  that  correct? 

7  A    Yes,  sir,  that  is  correct. 

8  Q    Then  you  promptly  ascertained  that,  given  the  type 

9  of  aircraft  the  CIA  contemplated,  that  would  not  be 

10  possible? 

11  A    Not  for  all  of  the  types  of  aircraft;  that  is 

12  correct,  sir. 

13  Q    And  so  at  a  later  date,  and  perhaps  we  will  get 

14  into  it  further  in  the  chronology,  but  at  a  later  date  the 

15  decision  was  made  that  these  would  be  transported  to 

16  Redstone  from  which  the  airlift  would  take  place? 

17  A    Yes,  sir;  that  is  correct.   Also,  on  my  first  day 

18  with^^^^^^^^^l  because  we  had  dealt  before  on  issues  and 

19  he  always  knew  that  we  priced  things  for  him,  he  wanted  to 
2  0  know  what  it  was  going  to  cost. 

21  He  and  I  compared  notes  that  morning  on  what — 

22  since  this  was  the  first  time  that  I  had  received  a  support 
2  3  request  without  a  piece  of  paper  specifically  discussing  the 

24  details  of  it--I  was  just  doing  the  basic  thing  that  any 

25  good  action  officer  would  do,  which  was  comparing  the  stock 



1  number  that  I  had  and  the  terminology  out  of  the  Army  Master 

2  Data  File,  and  I  said^^^^^|is  this  what  you  want?   I  said, 

3  this  is  what  I  got  from  the  DCSLG  on  Saturday  morning,  and 

4  we  ascertained  that  same  day  that,  yes,  that  was  what  he 

5  wanted . 

6  So  after  that  particular  discussion  was  done,  I 

7  have  now  called  back  Col.  Lincoln  to  work  on  weights  and 

8  cubes  and  airfield  problems.   Gen.  Russo  calls  me  up  and 

9  said,  Chris,  he  said,  I've  been  talking  to  Gen.  Register 

10  about  you.   He  said,  why  don't  you  tell  me  all  about  this 

11  project. 

12  Q    This  is  Gen.  Vincent  Russo? 

13  A    Yes,  sir,  the  Army  Assistant  Deputy  Chief  of  Staff 

14  for  Logistics. 

15  Q    And  at  this  point,  this  is  his  first  involvement? 

16  Is  that  right? 

17  A    Yes,  sir.   He  had  been  away  on  a  TDY  trip  when 

18  this  mission  got  started.   For  the  record,  it  was  normally 

19  he  that  I  dealt  with  day  to  day  on  these  kinds  of  missions. 
2  0        Q    And  it  was  in  his  absence  that  you — 

21  A    Dealt  with  Gen.  Register,  which  was  the  exception 

22  rather  than  the  rule. 

2  3        Q    Okay,  what  did  you  and  Gen.  Russo  discuss? 

24        A    Gen.  Russo  gave  me  a  dump  of  what  Gen.  Register 

2  5  had  told  him  had  transpired  from  Gen.  Register's  end.   Then 




1  Gen.  Register  says,  Chris,  could  you  tell  me  about  what  you 

2  have  been  working  on?  So  I  brought  him  up  to  date  both  on 

3  my  discussions  that  weekend  with  Col.  Lincoln,  as  well  as  my 

4  discussions  earlier  that  same  morning  witf 

5  I  told  Gen.  Russo  then  that  I  had  unresolved 

6  business  to  go  work  on.   That  is,  to  get  the  weights  and 

7  cubes  done  on  these  various  types  of  aircraft.   Also,  that 

8  particular  morning  I  got  back  to^^^^^^^^^Hand  asked  him 

9  if  he  wanted  me  to  work  with  the  FAA  in  getting  them 

10  clearances  for  a  contract  airplane,  and  he  declined  that 

11  offer  that  morning,  but  said  he  would  reserve  the  right  to 

12  do  that  later. 

13  Q    Before  we  go  further,  let  me  clarify  for  the 

14  record  or  make  clear  what  would  have  been  your  normal 

15  process  in  handling  a  requirement  such  as  this.   Now  we've 

16  established  that  it  did  not  go  throughthe^^^^^^^^^^^^ 
^^^^^H  If  it     gone         the^^^^^^^^^^^^^PVwho 

18  were  some  of  the  individuals  you  would  have  dealt  with? 

19  A    Off  the  record? 

20  MR.  SAXON:   Yes. 

21  [Discussion  off  the  record.] 

22  BY  MR.  SAXON:   (Resuming) 

23  Q    Okai 

24  A 



























I  had  several  principals — I  will  keep  their  names 
office  the  record — that  I  dealt  with.   They  had  a  singular 
requirement  that  any  request  to  us  had  to  be  in  writing. 
One  of  their  principals  signed  that  request.   It  then  went 

^^^^^^^^^1  would  then  call  me  to  come  down 
and  get  them. 

^^^^^^^^^^^^^^^^^Hwould     even      us  a  request 
he  felt  that  it  wasn't  proper  for  the  Army  to  support,  but 
he  was  exercising  oversight  for  the  Secretary  of  the  Army  in 
that  regard.   Briefly,  before  I  got  a  request  that  killed 
people  to  work  on,  those  requests  had  gone  up  to  be 
personally  reviewed  by  the  Vice  Chief  of  Staff  of  the  Army, 
and  the  Vice  Chief  of  Staff  of  the  Army  would  give! 

^guidance  as  to  whether  the  memo  was  to  go  to  the 





1  Secretary  for  signature,  which  required  also  Chief  of  Staff 

2  review,  or  whether  it  was  to  go  to  the  Under  Secretary  and 

3  required  a  Vice  Chief  of  Staff  review. 

4  ^^^^^^^^That  was  called  a  "concept  approval."   So  when 

5  ^^^^^^^^^^^Hgave  me  an  agency  request  to  work  on  that 

6  involved  things  that  killed  people,  it  already  had  something 

7  called  an  Army  Leadership  Concept  Approval. 

8  Once  I  had  worked  on  a  request  of  this  particular 

9  sort,  a  whole  host  of  folks  got  involved  routinely  in 

10  helping  me  staff  the  action.   One  of  them  was  the  Office  of 

11  the  Director,  Military  Support,  DCSOP,  and  that  is 

12  abbreviated  DOMS,  D-O-M-S.   That  again  stands  for  the  office 

13  of  the  Director,  Military  Support. 

14  They  looked  at  this  issue  for  readiness.   There 

15  were  a  number  of  cleared  individuals  down  there  that  looked 

16  at  this  for  its  impact  on  readiness.   If  they  would  not  give 

17  us  a  chop,  that  would  normally  stop  the  action  right  there. 

18  Q    Did  that  ever  happen? 

19  A    There  had  been  a  number  of  times  where  readiness 

20  became  an  issue  and  affected  how  we  supported  an  Army 

21  mission.   Generally,  I  might  add,  that  via  classified 

22  telephone,  if  the  Agency  was  contemplating  anything  big, 

2  3  that  they  felt,  and  they  were  pretty  well  experts  at  this, 

24  if  they  felt  there  was  a  tendency  for  a  mission  to  have  an 

25  impact  on  Army  readiness,  they  would  scope  it  out  by 


























classified  telephone  first. 

Q    So  you're  saying  before  a  written  request  came 
over,  someone  in  I  guess  IDSB  would  call  you,  say  here's 
what  we're  thinking  about,  and  in  fact  you  would  not  only 
tell  them  what  the  preliminary  action  was  that  you  had,  but 
you  would  check  stock  numbers,  availability,  price,  et 

A    Yes,  sir,  that  was  routine.   Normally,  if  we  told 
them  it  was  going  to  have  a  negative  impact  on  Army 
readiness,  they  would  back  off.   That  would  normally  at  the 
Agency  site  kill  an  action  before  it  ever  got  here. 



G^Q^    SO 


^y  -',  T!  V 


And  were  these  for  routine  kinds  of  items?  Or  did 
you  ever  use  this  process  to  handle  fairly  sensitive 
matters,  or  sensitive  transfers? 





























So  I  guess  the  answer 
is,  yes,  that  we  had  used  this  sort  of  system  on  other 
occasions  to  support  urgent  requirements.   Some  of  those 
enforcement  agencies  have  frequently  asked  us  for  same-day 
support.   So  we  were  used  to  not  being  bureaucratic.   We 
were  used  to  being  fast  and  efficient. 

Q    In  the  roughly  three  years  previous  that  you  had 
spent  in  this  job,^^^^^^^^^Hbeen  asked  by  the  CIA  for  a 
TOW  missile,  prior  to  this  requirement? 

A    No,  sir, 1 

Q    Now  I  interrupted.   If  you  would,  go  back  and 
continue  where  you  were  in  the  chronology.   You  had  talked 
witt^^^^^^^^^Hon  Monday  morning.   Vou  had  spoken  to  Gen. 
Russo.   Where  are  we? 

A    Yes,  sir.   We  diffused  slightly  when  you  asked  me 
to  go  through  for  the  record  our  normal  staffing  procedure. 
We  are  now  back  to  the  Monday  morning  after  the  second  day. 
I'm  now  working  with  MICOM  in  getting  details  on 
weights  and  cubes  ready  foi^^^^^^^^^Bat  the  Agency.   I'm 
keeping  Gen.  Russo  informed  on  a  daily  basis.   The 
requirement  that  Monday  was  to  support  an  upload  of  1000 
missiles  as  early  as  the  coming  Saturday,  the  29th  of 

That  changed  at  the  last  minute.   Although  we  had 
MAC  support — this  is,  for  the  record,  Military  Airlift 





1  Command,  abbreviated  MAC,  we  had  MAC  support  lined  up  for 

2  that  Saturday  and  we  dropped  it  at  the  last  minute,  causing 

3  some  consternation. 

4  Q    Now  when  you  first  got  with  Mr.  Hill  and  got  the 

5  stock  number  and  model  numbers,  you  looked  up  the  price 

6  yourself,  I  believe,  in  the  Army  Master  Data  File.   Is  that 

7  correct? 

8  A    As  a  matter  of  fact,  that's  correct. 

9  Q    For  the  record,  now,  why  don't  you  take  a  moment 

10  and  tell  us  about  the  MOF,  what  is  it,  how  is  it  used,  et 

11  cetera. 

12  A    Briefly,  the  Army  Master  Data  File  is  a  compendium 

13  updated  monthly  with  prices  and  national  stock  numbers  of 

14  items  in  the  Army's  wholesale  supply  inventory. 

15  Q    Without  the  pictures,  is  it  more  or  less  the 

16  Army's  Sears  Roebuck  Catalog? 

17  A    That  is  correct.   It  is  a  numerical  catalog 

18  published  on  microfilm,  and  it  comes  out  monthly.   Briefly, 

19  it  gives  you  the  formal  nomenclature  of  an  item  in 

20  abbreviated  form,  as  well  as  some  other  codes  to  assist  you 

21  in  ordering  the  item. 

22  It  is  important,  for  the  record,  that  the  price 

23  that  is  published  in  the  MDF  is  normally  not  a  price  that 

24  the  manufacturer  charges  the  Army,  but  it's  something  called 

25  a  "standard  price"  which  some  Army  folks  at  the  Army  catalog 





1  data  activity  sit  down  and  come  up  with  this  price  based  on 

2  last  contract  price,  and  other  Army  ancillary  costs.   So  it 

3  is  designed  to  allow  the  Amy  supply  system  to  operate  not 

4  at  a  loss. 

5  Q    And  does  it  list  items  according  to  their  last 

6  seven  numbers  of  the  item's  full  stock  number? 

7  A    Yes.   That  is  important.   The  items  that  are  in 

8  there  are  listed  based  on  a  catalog  number  assigned.   I 

9  think  in  regards  it  has  interest  to  this  particular  hearing 

10  and  committee.   The  items  that  are  in  there  are  not  in  any 

11  particular  sequence.   That  is,  you  won't  find  eight 

12  different  models  of  one  item  together  in  catalog  data 

13  activity  because  as  years  and  months  go  by,  the  next 

14  available  number  off  the  register  is  assigned  to  the  next 

15  new  item. 

16  Q    They  are  then  in  chronological  sequence?   Is  that 

17  correct? 

18  A    Well,  you  wouldn't  be  able  to  tell  that,  though, 

19  because  when  you  look  up  an  item,  when  you  look  up  the  last 

20  Sevan  numbers,  the  NINN,  it's  called  the  NINN  portion  of  the 

21  stock  number,  N-I-N-N,  the  National  Inventory  Identification 

22  Number,  and  that  is  the  only  number  that  is  in  sequence. 

23  Q    Just  so  this  is  clear.   If  I  wanted  to  look  up  a 

24  TOW  missile,  I  don't  have  in  my  hand  a  catalog,  a  hard-copy 

25  catalog  and  turn  to  page  12  and  find  5,  or  8,  or  10  TOW 





1  missiles  listed  according  to  the  variation  of  the  TOW  and 

2  out  to  the  side,  the  price?   Is  that  correct? 

3  A    That  is  correct,  sir. 

4  Q    Now  that  data  is  in  the  MDF,  but  it's  on 

5  microfiche.   Is  that  correct? 

6  A    That  is  correct,  sir. 

7  Q    And  it's  about  40  pages  on  microfiche? 

8  A    That  is  also  correct,  40  microfiche  pages  with 

9  literally  thousands  of  individual  pages  of  detail  on  the 

10  MDF. 

11  Q    And  as  you've  indicated,  they're  not  listed  in 

12  sequence  according  to  groupings  of  the  items,  so  I  would 

13  have  to  go  throughout  the  many  pages  of  the  MDF  to  find  all 

14  of  the  TOW  missiles  listed  and  all  of  their  prices.   Is  that 

15  correct? 

16  A    Yes,  sir.   But  it  would  be  literally  impossible 

17  for  you  to  do  that  without  knowing  the  stock  numbers.   You 

18  would  have  to  know  the  last  seven  digits  of  the  stock 

19  numbers  of  other  TOW  missile  models  to  find  then. 

20  Q    Now  how  would  someone  like  Mr.  Hill  have  known  to 

21  find  the  last  seven  digits  of  a  basic  TOW,  or  a  71  Alpha? 

22  A    Well,  to  start  with,  John  had  some  documents  that 

23  listed  a  model  number  and  a  stock  number  for  a  basic  vanilla 

24  TOW.   He  also  had  some  stock  numbers  and  models  for  other, 

25  more  advanced  items,  but  that  wasn't  what  we  were  asking 





1  for. 

2  John's  only  question  that  Saturday  morning  was, 

3  did  I  want  one  that  worked,  or  did  I  want  a  training  round? 

4  Q    And  what  did  you  say? 

5  A    John,  I  said,  I  want  one  that  works.   And  he  said, 

6  you  mean  you're  going  to  shoot  it  at  something  and  you  want 

7  to  penetrate  something?   And  I  said,  that  is  correct.   So  he 

8  did  not  then  work  on  a  training  round  for  me,  which  he  told 

9  me  had  another,  different  stock  number. 

10  That  was  kind  of  the  scenario  that  took  place  as 

11  John  Hill  and  I  worked  out  the  stock  number.   We  are  still 

12  only  up  now  to  the  second  day  of  this  event. 

13  Q    Just  for  the  record,  when  Hill  gave  you  the  stock 

14  and  model  numbers  and  you  looked  up  the  price  in  the  MDF, 

15  just  so  we  have  this  at  this  point  for  the  record,  what  was 

16  the  price  as  you  found  it  in  the  MDF  for  the  basic  TOW? 

17  A    It  was  $3179. 

18  Q    And  as  far  as  you  know,  until  we  complicate  things 

19  further  in  the  chronology,  that  was  the  correct  price  for 

20  what  you  thought  was  the  requirement?   That  is,  it  was  a 

21  basic  vanilla  TOW? 

22  A    Yes,  sir.   Although  the  MDF  does  not  use  the  words 

23  "basic  vanilla  TOW."    In  fact.  Guided  Attack  Missile  is  the 

24  nonabbreviated  nomenclature. 

25  Q    One  more  background  item  for  the  record.   You  told 





1  us  earlier  about 

2  A 

3  Q    Within  the  CIA,  which  you  have  dealt  with.   I 

4  believe  you  told  us  in  April  when  we  interviewed  you  that  in 

5  fact  you  had  been  instructed  by  the  CIA  only  to  deal  with 

6  ^^^^^^V^s  that 

7  A    That  is  correct,  even  to  the  point  where  they 

8  wanted  to  have  a  direct  call  in  to  the  Office  of  the 

9  Director  of  Logistics,  CIA,  should  one  of  their  agencies  or 

10  subordinate  departments  try  to  get  in  contact  with  the  Army 

11  for  support  without  going  through  that  office. 

12  Q    Did  you  ever  deviate  from  their  instructions  to 

13  deal  exclusively  with! 

14  A    Yes,  as  a  matter  of  fact  I  think  it  is  important 

15  for  the  record  that  on  this  particular  case  of  supporting 

16  TOW  missiles  and  HAWK  parts  that  at  the  beginning,  in 
addition  to  avoiding  the  Army^^^^^^^^^^^^^^lfrom  the 

18  DoD  end,  I  was  also  asked  to  avoid  dealing  with  my  usual  CIA 

19  counterparts. 

20  This  also  became  urgent  later  on  when  I  needed 

21  some  document  numbers  for  some  supply  requisitions  to 

22  support  some  of  these  parts  and  pieces,  and  I  was  unable  to 
2  3  get  those  document  numbers  from  the  Agency's  Director  of 

24  Logistics  because  they  did  not  want  lower  level  people 

25  involved  in  this  mission  that  worked  at  the  Agency. 





1  Q    All  right.   At  this  point,  before  going  further 

2  into  the  chronology,  did  you  know  what  the  destination  of 

3  the  TOWs  was  to  be? 

4  A    No,  sir,  I  did  not. 

5  Q    Now  you  indicated  clearly  you  did  not  )cnow  it  was 

6  Iran.   You  knew  they  were  going  to  the  CIA? 

7  A    Yes,  sir,  and  I — 

8  Q    Did  you  know  where  the  CIA  was  going  to  have  them 

9  shipped  from  Anniston  at  that  point? 

10  A    No,  sir,  I  did  not;  although  that  was  a  matter  of 

11  principal  concern  to  me.   I  was  normally  responsible  for 

12  follow-on  shipments  in  many  cases  for  the  Agency,  and  should 

13  they  have  been  using  a  DoD  transportation  system,  then  I 

14  absolutely  needed  to  know  what  the  point  of  demarcation  was. 

15  They  told  me  that  they  had  intended  at  some  point  in  this 

16  project,  which  I  knew  early  on  that  they  intended  to  lift 

17  these  off  from  a  particular  post,  and  that  that  was  going  to 

18  be  done,  and  the  Agency  was  going  to  assume  management 

19  control  for  this  and  would  not  need  my  assistance,  nor  would 

20  they  need  support  of  the  DoD  transportation  system. 

21  Q    I  believe  you  told  us  previously  that  within 

22  roughly  the  first  48  hours  you  did  know  that  they  were  going 

go  ^°^^^^^^^^^|  Is 
24        A    Yes,  sir. 
2  5        Q    And  what  is| 





























A    For  the  record,  and  this  is  classified 
information,  that 

^^^^^^^^^^^^^^  That  is 
classified  at  the  Secret  level. 

Q    I  believe  you  told  us — as  is  in  fact  this  whole 
transcript — I  believe  you  told  us  that  you  did  three  things 
in  those  early  days  in  trying  to  find  out  what  the 
destination  was.   Would  you  tell  us  what  you  did?   I  have  in 
mind — 

Yes,  sir.   I  can  recall  I  talked,  number  one,  with 
who  was  the  Agency  Action  Officer.   He 

You  asked  him  where  these  were  going? 
Yes,  pointblank.   I  involved  myself  with  him, 
because  Gen.  Register,  the  Army  Deputy  Chief  of  Staff  for 
Logistics,  asked  me  could  I  find  out  where  they  were  going. 
^^^^^^^Bsaid  he  was  not  able  to  tell  me,  but  he  would 
ask^^^^^^^^^^^^^^^^^^^^|answer      to  me 
no,  I  can't  tell  you. 

Q    So  initially  you  asked,  yourself,  where  they  were 
going;  and  then  later — 

A    Yes,  sir.   Then  later  I  was  asking  for  Gen. 
Register.   That  one  was  pursued  up_to_the  level  of  Mr. 





1  ^^^^^^^^^^^^^^^^^Hboss  the  Agency   for 

2  mission. 

3  Later  one  it  became  more  urgent  because  I  wanted 

4  to  make  sure  concerning  incidents  with  the  FAA,  or  the 

5  Department  of  Transportation,  that  I  knew  where  they  were 

6  headed  once  they  1« 

7  Mr  .^^^^^^^^^^^H  who  was  the  Agency  Action 

8  Officer  principal  on  the  ground  al^^^^^^^^^^Hassured  me 

9  that  they  would  be  out  of  the  U.S.  borders  within  hours,  and 

10  he  was  going  to  assume  responsibility.   I  told  him,  though, 

11  that  as  in  all  cases  in  the  past  that  should  an  accident 

12  happen  before  that  plane  got  across  the  boarders,  if  he  did 

13  intend  to  airlift  them  out  o^^^^^^^^^^Hthat  I  was  the 

14  guy  responsible  for  dealing  with  other  government 

15  departments,  so  I  had  a  concern  right  up  until  the  time  that 

16  ^^^^^^^^^^^Hcalled  me  back  to  tell  me  the  shipment  was 

17  over  the  U.S.  borders  and  gone. 

18  Q    And  did^^^^^^^^Hever  tell  you  what  the 

19  destination  was  going  to  be  once  it  left? 

20  A    No.   He  said  he  could  not  do  that.   He  knew  I  was 

21  concerned  about  it  right  up  to  the  end. 

22  Q    And  I  think  the  third  way  you  endeavored  to  find 
2  3  out  where  these  were  destined  was  to  call! 

24  Tell  us  about  that,  and  tell  us  who  she  is. 

25  A 



























On  this  particular  matter,  I  needed  some  backup  in 
case  something  went  wrong  with  the  shipment,  and  I  tolc 
nonnally^^^^^^^^^Hmilitary  traffic  management  command  of 
the  Army  normally  would  be  involved  in  tracking  the  shipment 
in  case  anything  happened  to  it.  ^^^^^^^^^^B was  also 
unable  to  tell  me,  or  could  not,  would  not  tell  me  where  the 
shipment  was  going. 

Again,  Z  told^^^^^^^^^^Bkeeping  me  out  of  the 
picture,  that  this  was  very  much  of  a  concern  for  me 
because  ^^^^^^^^^^Bshould  anything  happen  to  it  anyplace 
within  the  Continental  U.S.  borders,  that  I  was  quickly 
going  to  have  to  come  up  with  a  story.   And  I  was  very 
concerned  about  not  having  it  already  in  the  system,  which 
we  had  done  at  almost  all  other  shipments  that  moved  within 
the  U.S.  borders. 

Q    Normally  the  people  with  whom  you  dealt,  your 
points  of  contact  whether  for  transportation  purposes  or  at 
the  Agency,  they  normally  did  tell  you  these  things? 

A    They  didn't  tell  me  on  all  shipments  leavingl 
^^^^^Vwhere  they  were  going,  but  on  any  number  of  very 
critical  missions  I  had  been  involved  frequently  in  putting 





1  things  in  the  defense  transportation  system  for  them.   This 

2  was  one  of  the  most  sensitive  requests  we  had  ever  worked 

3  on,  and  certainly  I  was  more  concerned  than  I  would  be  on 

4  shipping  toilet  paper  or  some  other  innocuous  type  of 

5  supply. 

6  Q    Okay.   I  think  we  can  return  to  the  chronology 

7  then  and  see  where  we  are.   We  are  on  day  two.   What  happens 

8  next? 

9  A    I  think  that  I  can  move  you  rapidly  forward  to  the 

10  end  of  the  week.   We  got  from^^^^^^^^3the  weights  and 

11  cubes  on  different  types  of  aircraft.   Later  that  week  he 

12  told  me  to  be  ready  to  ship  that  Saturday,  the  29th,  up  to 

13  1000  missiles. 

14  That  involved  gathering  together  some  Air  Force 

15  pallets.   He  wanted  them  put  on  Air  Force  463L  pallets.   For 

16  the  record,  that  is  a  standard  Air  Force  pallet  to  fit  in 

17  MAC  type  aircraft. 

18  We  gathered  that  equipment  together  and  hauled  it 

19  down  to  Redstone  Arsenal.   We  removed  the  missiles  from 

20  Anniston,  brought  them  up  under  guarded  convoy  to  Redstone. 

21  Q    At  that  point  you  had  determined  that  you  needed 

22  to  use  Redstone.   Why  was  Redstone  selected? 

2  3        A    Redstone  was  picked  because  of  the  length  of  the 

24  runway,  which  was  sufficiently  large  to  accommodate  any  type 

25  of  aircraft.   Even  as  late  as  two  days  before  the  mission. 




1  ^^^^^^^^^1  could  not  tell  me  what  sort  of  aircraft  would 

2  come  in  on  the  29th  of  January  of  support  the  mission. 

3  Q    Now  you  told  us  that  you  laid  on  a  MAC  airlift 

4  capability. 

5  A    We  laid  on  a  MAC  airlift  capability.   MAC  again 

6  declined  to  tell  us  what  type  of  aircraft,  only  that  they 

7  would  see  sufficiently  a  goodly  number  of  aircraft  brought 

8  in  there  to  haul  out  the  thousand  missiles. 

9  We  had  also  provided  to  them  our  weights  and  cubes 

10  on  the  different  sorts  of  aircraft. 

11  Q    Now  is  getting  MAC  airlift  capability  something 

12  that  is  easily  done? 

13  A    No,  sir.   For  the  record,  MAC  typically  requires 

14  for  a  routine  mission  two  weeks'  notice  to  permit  them 

15  efficiency  of  operations  and  proper  scheduling.   They  can 

16  support  an  emergency  crisis  mission  within  72  hours,  and 

17  almost  nothing  can  be  done  unless  you  give  them  48  hours 

18  notice.   That  is  simply  because  they  have  all  their  aircraft 

19  fully  committed,  and  within  the  72-hour  time  frame  they've 
2  0  got  everything  committed  even  to  emergencies. 

21  So  we  did  not  cancel.   I  had  gone  all  the  way  down 

22  to  Redstone  arsenal  the  afternoon  before  the  29th  of 

23  January,  and  we  literally  cancelled  at  the  very  last  minute 

24  wher^^^^^^^^fcalled  me  on  the  telephone  and  said,  not 
2  5  this  time;  come  on  back  home. 





1  Q    Is  that  something  that  took  place  to  the 

2  consternation  of  the  MAC  folks? 

3  A    So  much  to  the  consternation,  that  the  next  time 

4  that  we  needed  them,  we  were  unable  to  get  them  on  short 

5  notice. 

6  Q    They  simply  said  no? 

7  A    They  simply  said,  hey,  guys,  give  us  the  proper 

8  notice  in  accordance  with  the  regulations. 

9  Q    And  they  viewed  their  rescheduling  for  meeting  the 

10  first  requirement  as  an  opportunity  cost? 

11  A    Well,  it  was  a  severe  opportunity  cost.   As  a 

12  matter  of  fact,  because  MAC  has  to  account — all  of  these 

13  missions  are  charged  to  someone.   And  a  loss  of  several 

14  thousands  of  dollars,  a  very  large  sum  of  money  actually  in 

15  terms  of  $30,000  to  $60,000,  was  lost  in  opportunity  cost 

16  for  MAC  because  of  this  shortfall,  and  because  that  aircraft 

17  again  could  have  been  laid  on  to  support  another  mission. 

18  That  mission  was  simply  lost.   That  would  be  the 

19  cost  to  the  Air  Force  of  not  being  able  to  support  another 

20  mission. 

21  Q    Let's  see  if  we  can  get  you  adequately  on  the 

22  ground  at  Redstone  with  everyone  you  need  to  know.   We're 
2  3  talking  about  1000  missiles,  and  they  were  shipped  from 

24  Anniston  Army  Depot  to  Redstone.   How  did  they  travel  from 

25  Anniston? 




1  A    They  traveled  from  Anniston  to  Redstone  by  truck 

2  convoy. 

3  Q    Was  that  commercial  truck,  or  military  convoy? 

4  A    Sir,  I  don't  know  at  this  point.   I  know  that  I 

5  asked  Col.  Lincoln  to  lay  all  that  one.   I  do  know  that  at 

6  my  request  they  had  an  extra  empty  truck  in  case  of  a 

7  breakdown,  and  all  of  the  convoy  was  guarded  fore  and  aft. 

8  Q    So  you  were  on  the  ground  ready  for  the  missiles 

9  to  go  forward? 

10  A    Well,  with  some  problems.   We  had  a  couple 

11  problems.   One  of  them  was  that  at  the  last  minute — one  of 

12  the  requirements  of  Gen.  Russo,  the  Army  Assistant  Deputy 

13  Chief  of  Staff,  had  laid  on  early  in  the  requirement  is  that 

14  although  he  was  very  uncomfortable  with  no  paperwork  to 

15  support  the  mission  request,  he  wasn't  going  to  "do  nothin'" 

16  as  he  said,  without  seeing  some  money. 

17  Q    Is  that  when  he  told  you,  "no  tickey,  no  laundry"? 

18  A    Right  in  that  time  frame.   The  reason  was  was  that 

19  we  had  had  several  what  I  call  aborted  promises  on  this 

20  business  of  getting  the  paperwork  over.   We  had  been  told  at 

21  the  beginning  that  the  mission  was  all  approved  at  the 

22  highest  levels. 

unl  ike^^^^^^^^^^^^^^V  where 

24  money  came  with  the  support  request — that  is,  the  guarantee 

2  5  of  funds  in  writing — we  didn't  have  any  guarantee  of  funds. 




1  It  had  been  a  sticking  point  in  the  early  days  of  the 

2  mission.   So — 

4  of  funds  from  the  agency? 

7  the  fund  sites  to  be  charged.   So  when  this  mission  aborted, 

8  the  idea  was  that  over  to  my  office,  and  one  of  the 

9  counterparts  left  behind  me,  was  going  to  come  the  paperwork 

10  before  we  executed.   That  didn't  happen  that  afternoon  that 

11  I  was  on  my  way  to  Redstone.   I  was  already  in-air,  but  the 

12  piece  of  paper  was  supposed  to  come  over  to  the  Army's 

13  office. 

14  It  didn't  come. 

15  MR.  KREUZER:   When  you  say  the  papers  identified 

16  Mn  the  fund  sites  which  were  to  be  charged? 

17  THE  WITNESS:   Well,  what  that  means  is  there 

18  were — I  don't  want  to  go  into  details;  they  are  highly 

19  classified — how  the  funds  were  identified  were  clearly 

20  identified  on  the  piece  of  paper.   That  is,  there  was  no 

21  question  in  anybody's  mind,  either  at  the  Army  level  or  the 

22  Agency  level,  what  particular  pot  of  funds  were  to  be 
2  3  charged. 

24  MR.  KREUZER:   Who  provided  the  fund  sites? 

25  THE  WITH£SSi -.Ihq5Q«,qAP^jj^Hnj41y  and  typically 





1  out  of  the  Office  of  the  Director  of  Logistics,  CIA.   Once 

2  again,  on  this  particular  request,  it  was  highly  unusual.   A 

3  first,  well,  not  a  first,  but  a  rare  event. 
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^K  Agency 

5  principal,  was  going  to  provide  us  the  fund  site  directly. 

6  And  that  had  not  happened  by  the  afternoon  that  I  had  gone 

7  to  Redstone  to  execute  the  first  planned  phase  of  the 

8  mission. 

9  BY  MR.  SAXON:   (Resuming) 

10  Q    And  how  were  you  informed  that  the  certification 

11  of  funds  was  not  available,  and  that  the  mission  should  be 

12  aborted?  ^^^^^^^^^__ 

A    I  talked  t(^||^|^^^^H  But  he  had  a  second 

14  reason.   He  told  me  that  the  real  reason  that  day  that  he 

15  was  aborting  the  mission  was  that  they  could  not  get  follow- 
on  transportation  from^^^^^^^^^B  That  was  the  real 

17  reason  given  to  me.   That  proved  later  on  for  us  to  be  a 

18  sticking  point.   We  were  literally  after  the  29th  of 

19  January,  until  we  actually  physically  executed  early  on 

20  Valentine's  Day,  the  14th  of  Febru^  . ,  we  were  literally 

21  delayed  a  day  at  a  time  while  we  tried  to  line  up  the 

22  follow-on  transportation  support. 

2  3        Q    Were  you  told  that  the  Agency  was  having  trouble 

24  getting  the  funds  because  of  external  problems? 

25  A    Yes,  sii 






























Who  told 


Q    Was  he I 

A    Yes,  sir,  he  was  at  that  time. 

Q    And  what  did  he  tell  you? 

A    He  told  me  that  he  was  having  a  lot  of  difficulty 
getting  these  funds.   He  was  very  apologetic.   He  and  I — he 
is  a  very  professional,  capable  individual.   He  had  a  lot  of 
consternation  himself  about  how  bumpy  it  was  going. 

Q    Did  he  tell  you  where  the  Agency  was  getting  the 
funds,  and  with  whom  he  was  having  to  deal? 

A    Well,  he  told  me  he  was  dealing  with 
also  an  Agency  principal  in  terms  of  getting  the  release  of 
the  money. 

Q    Did  he  ot^^^^^^^^^Hever  tell  you  that  the  White 
House  was  involved  in  the  funding? 

A    Yes,  sir,  he  did.   As  a  matter  of  fact,  that  was 
discussed  extensively  during  these  periods  of  delays. 

Q    Which?   Witf 

Both  ^^^m^^^^^^^^^^^^^^^^^H  and 
it  was  simply  that  the  White  House  was  the  decision  maker  on 
release  of  the  funding;  and  that,  a  1  though ^^^^^^^^H was 
apparently  the  man  going  over  to  deal  with  the  White  House 
principals,  that  ' f _ LTJC Ji* " -' 'IC J< 1 11^ - -^  1-T "-'  ^^°  ^^^   going 




to  give^^^^^^^^^^^^Hthe  release.   Andl 

2  had  said  to  me  that  the  minute  that^^^^^^^^^B gave  him  the 

3  release  of  funds,  that  I  would  get  them.   He  obviously 

4  wanted  to  be  done  with  this  as  quickly  as  possible. 

5  Q    And  between  January  18th  and  February  13th,  I 

6  think  you  told  us  in  April  that  the  price  changed  a  couple 

7  of  times,  for  some  reason.   What  was  the  reason? 

8  A    The  price  on  the  missiles  changed  for  a  variety  of 

9  reasons,  sir.   The  first  and  most  important  reason  was  that 

10  after  the  delay  on  29  January,  the  very  first  reason  that 

11  the  price  changed  is  that  we  now  have  a  large  guard  force 

12  assembled. 

13  My  directions  to  Col.  Lincoln  were  not  to  leave 

14  these  weapons  unguarded  at  any  time,  thinking  about  the 

15  possibility  of  an  accident  or  civilian  mayhem. 

16  Q    So  they  were  physically  on  the  grounds  somewhere 

17  at  Redstone? 

18  A    In  a  secure  area,  under  a  detailed  guard.   Now  of 

19  course  the  cost  of  feeding  and  housing  a  guard  force  and 

20  paying  them  24  hours  a  day,  all  of  these  folks  were  under 

21  contract  labor  from  Anniston.   The  salaries  and  the  housing 

22  and  the  feeding,  the  TDY  costs  basically,  all  became  my 

23  responsibility  on  the  29th  of  January. 

24  Q    And  that  was  unanticipated,  because  the 

25  expectation  was  that  they  would  lift  off. 





1  A    Was  that  we  would  drive  them  up  and  deliver  them 

2  on  the  29th.   So  the  first  time  that  the  price  changed  was 

3  on  the  ancillary  costs  that  we  had  earlier  quoted.   And  we 

4  quoted  a  new  figure  on  the  ancillary  costs. 

5  Other  events,  to  try  to  keep  them  short,  it  was 

6  about  two  weeks  after  I  first  got  involved  with  Col.  Lincoln 

7  that  George  Williams,  his  deputy,  called  me  up  and  told  me 

8  that  although  they  had  originally  told  us,  yes,  they  could 

9  support  the  requirement  for  about  4000  basic  TOWS,  that  they 

10  did  not  feel  that  they  could  supply  that  many  now  after 

11  actually  checking  the  record  and  looking  at  the  condition  of 

12  the  items  in  storage  at  Anniston.   And  in  fact  he  told  me 

13  that  they  needed  to  add  a  MOIC  to  about  2300  of  these 

14  missiles. 

15  Q    All  right.   Let's  take  this  point  in  the  record  to 

16  talk  a  minute  about  the  problem  with  the  basic  TOW,  the 

17  flyback  problem,  what  a  MOIC  is,  et  cetera. 

18  A    Okay.   The  reason  that  2300  of  these  missiles  had 

19  to  be  fitted  with  a  MOIC  was  just  this  simple.   The  Agency 
2  0  did  not  want  any  items  that  were  not  in  condition  Code  A, 

21  Alpha.   Condition  Code  A  was  an  Army  condition  code  that 

22  basically  told  anybody  that  was  requisitioning  the  item  or 
2  3  using  it  that  it  was  in  brand-new  condition  and  would  work 

24  as  per  the  manufacturer's  specifications. 

25  Other  condition  codes  indicated  a  degraded 





1  condition  in  materiel,  and  in  the  particular  case  of  these 

2  2300  missiles  George  Williams  told  me  they  were  in  Condition 

3  Code  N.   In  the  case  of  these  Condition  Code  N  missiles, 

4  George  had  explained  that  these  still  were  brand-new 

5  missiles,  but  what  happened  over  the  case  of  thousands  and 

6  thousands  of  firings,  that  there  had  been  a  problem  with  two 

7  or  three  flybacks. 

8  A  flyback  is  a  particular  case  where  a  young 

9  soldier  with  a  guided  TOW  missile  system  had  fired  a  TOW 

10  missile  and  it  had  not  gone  forward  to  hit  the  target,  but 

11  had  in  fact  come  back  on  the  ground  where  the  young  soldiers 

12  firing  the  weapon  were. 

13  Although  this  had  only  happened  two  to  three  times 

14  out  of  literally  a  production  run  of  a  third-of-a-million 

15  missiles,  it  so  concerned  the  Army,  the  risk  of  death  or 

16  injury  to  a  young  Army  soldier,  that  they  had  taken  entire 

17  lots  of  these  missiles.   They  had  determined  that  what  had 

18  caused  the  flyback  was  a  faulty  electrical  circuit  on  these 

19  missiles  that  rarely,  but  unpredictably,  would  fail. 

20  The  missile  ordnance  inhibitor  circuit  was  a 

21  modification  developed  by  the  engineers  to  prevent  the 

22  flyback. 

23  Q    And  that's  a  "MOIC." 

24  A    And  so  the  Army  Missile  Command  had  said  that 

25  unless  this  MOIC  was  applied  to  certain  lot  numbers  of  these 





1  missiles,  that  they  had  them  all  classified  in  Condition 

2  Code  N,  even  though  they  were  brand-new  and  in  fact  all  of 

3  them  might  have  fired  without  any  problem  at  all  and  gone 

4  and  hit  the  target  as  they  should  have. 

5  Q    Who  manufactured  the  basic  TOWs  that  we're  talking 

6  about? 

7  A    Hughes  Manufacturing  Company. 

8  Q    Was  there  a  point  at  which  they  realized  that  they 

9  had  this  problem  with  the  TOW  and  took  some  action  with 

10  regard  to  subsequent  missiles  manufactured? 

11  A    I  want  to  say  for  the  record  that  a  number  of 

12  things  happened.   Number  one,  my  knowledge  of  what  Hughes 

13  Manufacturing  did  with  missile  and  ordnance  inhibitor 

14  circuits  greatly  expanded  after  November  '86  when  I  learned 

15  in  great  detail  all  that  transpired.   But  even  back  in  the 

16  early  February  time  frame,  I  knew  that  Hughes  also  was 

17  manufacturing  a  MOIC.   I'll  go  on  later  to  what  they  did 

18  later  on. 

19  But  Hughes  was  manufacturing  a  MOIC,  and  they  were 

20  delivering  so  many  a  month  to  Anniston  Army  Depot  to  outfit 

21  and  modify  these  basic  vanilla  TOW  missiles. 

22  Q    And  the  depot  in  Anniston  actually  had  an  assembly 

23  line— 

24  A    Which  they  periodically  ran.   They  periodically 

25  ran  this  assembly  line  to  outfit  the  missiles. 





1  Q    So  they  had  been  doing  that  prior  to  Snowball? 

2  A    Yes,  sir,  they  had,  on  an  intermittent  basis. 

3  They  had  about  a  thousand  already  on  hand  outfitted  with 

4  this  MOIC,  and  the  reason  was  that  they  frequently  engaged 

5  in  FMS  sales  of  these  basic  vanilla  TOWs,  and  they  were 

6  outfitting  them  with  this  MOIC  before  they  were  selling 

7  them. 

8  I  didn't  know  all  those  details,  of  course,  when 

9  we  talked  to  Col.  Lincoln  on  29  January,  but  by  the  time  we 

10  got  to  two  weeks  later,  George  had  told  me  that  what  made 

11  them  in  Condition  Code  A  was  this  $300  MOIC.   He  came  up 

12  with  that  price  for  that  item.   That's  what  he  needed  from 

13  me. 

14  Our  conversation  that  day  went  something  like 

15  this:   Needless  to  say,  I  was  very  concerned  that  we  had  a 

16  delivery  schedule  set  up  now.   I  didn't  talk  about  tha^ 

17  earlier,  but  for  the  record  the  delivery  schedule  that 

18  ^^^^|had  set  up  with  me  in  the  early  days  of  the  mission 

19  was  to  take  delivery  of  all  of  the  4508  missiles  within  a 

20  six-week  period,  approximately  two  weeks  apart,  with  the 

21  first  shipment  to  be  a  thousand.   That  clearly  meant  to  me 
2  2  that  the  other  3  500  were  going  to  be  divided  at  two-week 

23  intervals  and  shipped  later. 

24  When  George  Williams  called  me  to  tell  me  that  now 

25  the  delivery  dates  are  in  jeopardy  that  the  Department  of 




1  Army  has  conunitted  itself  to,  I  was  concerned.   I  said, 

2  George,  can  we  in  fact  modify  the  missiles  in  time  to  meet 

3  the  next  deadline  in  two  weeks?   He  said,  yes,  we  can  do 

4  that  if  you  will  provide  more  money  for  ancillary  costs  and 

5  money  to  pay  for  the  modification. 

6  So  George  and  I  at  that  time,  I  told  him  I  would 
go  forward  to^^^^^^^^^^^^H at  the  CIA  to  get  more  funds. 

8  I  did  do  that  and,  after  some  difficulty  and  consternation, 
^^^^^^^^^^^^■did  swear  to  me  that  he  would  get  more 

10  funds,  and  to  proceed  with  the  retrofit.   Also,  Gen.  Russo 

11  and  I  talked  in  detail  about  this  at  the  time. 

12  Q    Let  me  back  up  on  a  couple  of  things  you 

13  mentioned.   First,  in  terms  of  quantities  of  TOWs,  I  believe 

14  it  is  correct  that  the  first  number  that  you  were  given  was 

15  4000? 

16  A    About  4000  was  given  to  me  by  Gen.  Register,  as 

17  passed  down  to  him  through  the  DoD  leadership. 

18  Q    At  what  point  did  that  increase  to  4500? 

19  A    Within  just  a  couple  of  days  of  me  giving  the 

20  first  initial  price  quote  tc 

21  Q    And  at  what  time  did  it  go  from  4500  to  4508? 

22  A    Also  somewhere  in  the  very  early  days  of  that 

23  mission.   There  was  never  any  explanation  for  the  other  8. 

24  We  at  the  Army  level  asked^^^^^^^^Hwhy  on  such  an 

25  important  mission  were  we  screwing  around  with  the  number  of 





1  "8"?  There  was  never  any  adequate  explanation  provided  for 

2  that. 

3  Q    Did  it  become  a  bit  clearer  when  the  second 

4  shipment  came  to  the  number  of  508  TOWs? 

5  A    No.   I  could  speculate  on  why  that  was  the  number. 

6  I  would  rather  not  speculate. 

7  Q    Okay.   In  terms  of  the  MOIC,  in  layman's  terms  is 

8  it  safe  to  say  that  if  the  rocket  does  not  launch  within  a 

9  certain  period  of  time,  the  MOIC  shuts  it  off? 

10  A    Ifes,  sir,  that's  correct.   The  idea  is  to  prevent 

11  a  flyback.   That  was  the  principal,  the  gut  reason  for  the 

12  MOIC,  to  prevent  an  accident. 

13  Q    And  the  third  thing,  before  you  continue.   You 

14  were  given  the  MOIC  price  of  $300  by  whom? 

15  A    By  George  Williams,  the  Deputy  Project  Manager  in 

16  the  TOW  office  at  MICOM. 

17  Q    And  was  that  a  precise  price,  or  a  rough  price? 

18  A    George  and  I  understood  that  day,  since  he  knew 

19  that  I  was  going  forward,  I  told  him  external  to  the  Army, 

20  although  he  didn't  know  where  that  was,  to  get  funding 

21  approval  that  we  had  to  be  straight.   So  he  was  taking  that 

22  as  a  price  that  I  was  going  to  go  and  obtain  funding  on. 

23  And  that  was  the  price  to  put  the  MOIC  on,  and  put  the 

24  missiles  in  Condition  Code  A. 

25  Q    And  for  the  record,  did  DA  ever  learn  that  that 




1  was  a  little  bit  below  the  actual  price? 

2  A    yes,  sir.   DA  learned  that  in  November  and  later 

3  of  1986  that  in  fact  the  price  should  have  been  closer,  I 

4  believe,  to  about  $350. 

5  Q    $352?   Does  that  sound  about  right? 

6  A    Yes,  sir;  that  does  sound  right.   I  was  with  Col. 

7  Lincoln  when  we  both  learned  that  in  November  of  '86. 

8  Q    And  you  mentioned  that  you  did  at  some  point 

9  receive  a  certification  of  funds  from  the  CIA.   I  believe 

10  that  was  13  February.   Is  that  correct? 

11  A    About  half  an  hour  before  I  got  on  the  plane  to  go 

12  to  Redstone  for  the  second  scheduled  liftoff,  again  it  would 

13  have  been  aborted.   I  wasn't  planning  that  day  on  getting  on 

14  the  plane  to  go,  unless  we  saw  the  letter. 

15  Q    And  was  that  the  first  piece  of  paper  received 

16  from  the  Agency  on  Snowball? 

17  A    As  a  matter  of  fact,  sir,  it  was. 

18  Q    And  what  would  you  say  the  total  package  of 

19  paperwork  from  the  Agency  comprised? 

20  A    At  that  point,  that  single  piece  of  paper  simply 

21  said  that  X  number  of  millions  of  dollars  was  provided  to 

22  the  Department  of  Army,  to  Ma j .  Chris  Simpson,  in  support  of 
2  3  Project  Snowball.   It  did  not  have  a  word  on  there  about 

24  delivery  dates,  places,  nomenclatures,  missiles,  or  anything 

25  else.  bj&iM^  .<• 





























Q    And  I  believe  you  told  us — what  I  had  in  mind — I 
believe  you  told  us  in  April  that  the  total  package  of 
paperwork  that  you  saw  from  the  Agency  was  four  letters 
certifying  funds,  three  for  TOW  shipments  and  one  for  HAVfK 
repair  parts,  plus  a  HAWK  repair  parts'  list? 

A    Yes,  sir.   That  is  the  sum  total.   Besides  the 
letters  of  certification  of  funds,  the  HAWK  repair  parts' 
list  at  that  time  as  I  recall  was  about  14  field  typed 
pages,  and  that  was  the  sum  total  of  paperwork  that  I  got 
from  the  Agency  on  those  two  missions  together. 

Q    Okay.   Was  there  a  point  early  on  in  which  you 

if  the  purchaser  needed  launchers  for  the 

A    Oh,  absolutely. 

Q    Tell  us  about  that  conversation. 

Q    Col.  Lincoln's  office,  besides  supporting  the 
Army,  also  supports  a  whole  host  of  FMS  countries.   I 
believe  there's  something^^^^^^^^^^^H countries  besides 
the  U.S.  that  have  bought  TOW  missiles  from  America. 

Typically  the  purchasers  on  FMS  cases  bought 
launchers  to  go  with  the  missiles.   I  went  back  at  his 
request  to  ask^^^^^^^^H  did  he  need  launchers.   This  was 
a  logical  thing  to  ask.   He  said,  no.   When  I  went  back  to 
Col.  Lincoln,  that  was  another  issue  that  I  had  forgotten 
earlier,  Col.  Lincoln  said,  well,  that  limits  down  the 





1  places  that  we're  supporting. 

Q    Did  you  as)<^^^^^^^^^P  if  the  recipient  had 

3  launchers? 

4  A    Yes.   As  a  matter  of  fact,  the  answer  was,  yes, 

5  they  did.   Col.  Lincoln  did  surface,  which  he  should  have 

6  done  and  did  do  professionally,  because  he  said  that  they 

7  were  concerned  about  keeping  a  record  of  what  country  got 

8  them  because  of  flyback  problems  and  other  deterioration  of 

9  lots. 

10  Weapons,  missiles,  for  the  record,  are  a  lot  like 

11  drugs.   They  deteriorate  over  time,  and  the  missile  command 

12  keeps  precise  track  of  customers  so  that  they  can  notify 

13  them  immediately  of  any  changes  in  condition  on  the 

14  missiles. 

15  Q    Or  in  case  of  a  recall? 

16  A    Yes,  exactly.  ^^^^^^^^Hsa id  that  any  of  that 

17  sort  of  information  he  wanted  Col.  Lincoln  to  feed  to  me, 

18  and  that  I  was  to  feed  it  to  him  through  my  office.   So  we 

19  declined  to  give  Col.  Lincoln  at  his  request  the  ultimate 

20  destination  of  these  items. 

21  Q    Vfhen  you  found  out  that  the  country  did  not  need 

22  launchers  because  they  already  had  them,  did  you  then 
2  3  speculate  on  who  was  to  receive  them? 

24  A    Yes,  sir,  I  did  speculate.   And  of  course  it  was 

25  pure  speculation  cm,f^J2art,  only. 

part,  I 



























What  countries  did  you  speculate  on? 
I  had  speculated  that  they  might  be 

We  had  conflicts  going  on  in  a  lot  of  parts  of  the 
world  where  the  U.S.  had  interests. 

I  had  been  asked  I  know  by  the  House  Committee, 
John,  in  late  December  would  I  have  speculated  they  were 
going  to  Central  America?   I  would  have  said,  that  would 
have  been  one  place  I  would  not  have  speculated  simply 
because  with  that  U.S.  signature  stamped  all  over  those 
weapons  in  an  area  we  weren't  supposed  to  be  in  would  have 
drawn  an  awful  lot  of  attention  to  us. 

Q    You  said  early  on  that  you  were  not  told  that 
these  shipments  would  take  place  in  three  increments.   When 
did  you  find  that  out?   Was  that  when^^^^^^^H talked  to 

A    Later  that  week,  right.   Gen.  Register  knew 
nothing  about  that  that  first  Saturday.   In  fact,  all  he 
knew  was  that  we  might  have  to  support  the  mission  in  as 
early  as  72  hours,  the  whole  mission. 




1  Q    When  you  found  out  about  the  requirement  for  the 

2  MOIC,  did  you  brief  Gen.  Russo  on  this  development? 

3  A    Immediately.   I,  as  any  good  action  officer  would 

4  be  on  a  very  important  mission,  I  was  concerned  about  the 

5  change  in  truth.   You  know,  we  had  gone  from  two  weeks 

6  earlier  to  yes,  we  can  support  the  mission;  to  now  we  can't 

7  support  the  mission  without  more  costs  and  more  time.   That 

8  was  critical. 

9  And  I  got  to  him  that  same  day,  and  he  said,  let 
10  me  know  what  the  CIA  says  when  you  go  over  and  talk  toJ 

^^^^^^^^^^^^^^^^^Vwas  very  concerned.   Shortly  after 

12  this  MOIC  problem  became  known.  Gen.  Russo  asked  me  to 

13  prepare  a  message  and  send  it  down  to  Col.  Lincoln.   Now 

14  this  is  an  open  message  via  the  Army  AUTODIN  system.   It 

15  establishes  a  printed  record  of  some  guidance. 

16  The  guidance  was  that  we  had  got  some  quotes  from 

17  MICOM  of  what  it  was  going  to  cost  to  do  these 

18  modifications,  and  Gen.  Russo  wanted  me  to  tell  Col.  Lincoln 

19  in  this  message,  which  I  did — he  released  it  personally — 

20  that  we  understand  the  following  costs  have  been  incurred  to 

21  dat«,*  we  understand  the  following  costs  are  to  be  incurred. 

22  No  additional  costs  will  be  incurred  without  prior  approval 
2  3  from  this  Headquarters. 

2  4  That  sort  of  guidance  went  down  as  a  result  of  all 

25  that  meeting.   But  the  basic  decision  was  since  my — and  I 































called  Col.  Lincoln  up  shortly  thereafter  to  give  him  the 
go-ahead,  to  say  we've  got  the  funds. 

Q    You  talked  to^^^^^H  and  he  said,  yes,  we  can 
pay?  _ 

to^^^^^^^^^^^l  This    now  a 
funding  issue.   I  did  get  back  to^^^m^^^^^^Hlater  that 
day,  but  the  first  and  most  important  guy  was  the  guy  who 
was  controlling  the  money.   That  was  the  Assistant  Director. 
You  have  to  keep  in  mind  that| 

and  it  was  important  first  to  make  sure  that  he 
was  going  to  fund  this. 

Q    But  you  went  back  with  him  after  you  talked  with 
Mr.  Williams  and  found  out  the  MOIC  was  necessary,  and  that 
it  would  be — 

A    Absolutely.   That  all  happened  like  all  at  the 
same  time. 

Q  ^^^^^^^^^^^^^Hsaid  yes  as  to — 

A    He  didn't  say  yes,  right  away.   He  came  back  to  me 
I  think  within  about  24  hours  to  tell  me  that,  as  displeased 
as  he  was  about  the  change  in  the  truth,  that  he  would  in 
fact— he  did  at  that  time  mention  to  me  that  this  was 
critical  not  to  have  any  more  changes  in  the  truth,  which  we 
weren't  done  with  yet  anyway,  but  neither  one  of  us  knew 
that,  he  said,  because  the  White  House  was  controlling 



1  approvals  in  the  changes  on  the  funding. 

2  Q    All  right.   Let's  go  to  the  next  complicating 

3  factor  of  the  replacement  costs.   1  believe  somewhere  about 

4  the  second  week  of  things,  Col.  Lincoln  raised  that  issue 

5  with  you?   Is  that  correct? 

6  A    Yes,  sir,  he  did.   He  called  me  up  and  he  said  he 

7  had  been  studying — this  is  a  conversation  exclusive  of  the 

8  MOIC — Col.  Lincoln  called  me  up  to  say,  Chris,  he  said,  I've 

9  been  studying  this  business  of  these  missiles,  he  said  and, 

10  he  said,  here  we're  going  to  take  almost  4500  missiles  out 

11  of  the  wholesale  inventory,  he  said,  which  is  a  large 

12  percentage  of  our  wholesale  stock. 

13  He  said,  I  cannot  take  and  buy  a  new  state-of-the- 

14  art  missile  for  $3169,  plus  the  MOIC,  it  was  still  in 

15  materiel,  and  he  was  telling  me  that  the  price  to  buy  a  new 

16  missile  was  something  over  $8000.   And,  he  said,  I  really 

17  feel  we  ought  to  be  charging  a  higher  price. 

18  Q    So  when  he  talked  about  the  price  for  a  newer 

19  missile,  he  was  still  talking  about  a  basic  TOW? 

20  -dft*    ^^'     Mell,  the  term  "basic  TOW"  applies  to  a  basic 

21  I^Pbiich  has  an  old  model  warhead  on  it.   The  new  models  of 

22  the  TOW,  called  ITOW  and  TOW-2,  have  a  more  advanced  warhead 

23  on  them  that  will  penetrate  a  greater  degree  of  armor,  and 

24  also  the  more  accurate  killing  range. 

25  At  the  time  that  Col.  Lincoln  raised  this  issue 






























with  Be,  I  went  to  Gen.  Russo  with  our  pricing  regulation. 
And  this  is  a  formal  request,  now,  from  an  Army  full  Colonel 
who  is  the  Army's  principal  manager  of  TOW  missiles  not  to 
be  taken  lightly,  and  we  didn't  take  it  lightly,  we  took  it 
very  seriously.   I  got  out  the  pricing  regulation — 

Q     That  would  be  AR37-60? 

A    Right.   The  Army's  regulation  on  pricing  for 
materiel  and  services.   I  showed  Gen.  Russo  that  the 
regulation  said  that  on  items  no  longer  in  production,  the 
basic  TOW  had  not  been  produced  since  1976  by  Hughes 
Manufacturing;  that  on  items  no  longer  in  production,  that 
the  Army  pricing  regulation  did  not  allow  us  to  charge  any 
more  than  the  last  price  paid.   And  that  last  price  paid, 
which  we  now  know  to  be  an  error,  but  what  was  published  in 
the  AMDF  as  the  last  price  paid  was  $3169.   It  turned  out 
that  the  last  price  the  Army  paid  was  something  higher  than 
that  on  the  last  contract  in  '76. 

Q    But  as  best  you  knew  at  the  time — 

A    As  best  all  of  us  knew,  both  at  MICOM  and  at  DA 
ay  office,  we  knew  that  that  was  the  last  price. 
\,'   Russo  was  concerned  enough  about  the  price  that  he 
called  one  of  the  lawyers — I  can't  remember  whether  it  was 





1  Q    You  told  us  in  April  it  was  Tom  Taylor. 

2  A    Too  Taylor,  though,  came  in  to  discuss  the  Economy 

3  Act.   What  Gen.  Russo  was  concerned  with  was  not  so  much 

4  what  the  regulations  said  on  pricing,  but  also  was  that 

5  particular  regulation  in  the  particular  paragraph  I  was 

6  quoting  him,  was  that  the  proper  vehicle  for  transferring 

7  the  weapons  to  the  Agency. 

8  Q    Now  when  you  make  a  transfer  to  the  Agency,  you 

9  use  the  Economy  Act? 

10  A    Yes.   That  has  been  the  standard  legal  statute 

11  cited  as  the  basis  for  transferring  weapons  and  materiel  to 

12  the  Agency. 

13  Q    And  had  you  in  your  previous  2-1/2  to  3  years  had 

14  occasion  to  use  the  Economy  Act? 

15  A    As  a  standard.   That  was  the  standard  statute 

16  for — not  the  only  statute.   I  mentioned  to  you  in  April  that 

17  we  also  used  the  Leasing  statute  to  transfer  materiel.   That 

18  was  things  we  were  going  to  get  back,  though. 

19  Q    And  Tom  Taylor  was  familiar  with  the  Economy  Act? 

20  4K'A    Very  familj 

22        Q    And  did  the  Economy  Act  permit  DA  to  charge  the 

2  3  CIA  replacement  costs? 

24        A    No,  sir,  it  did  not.   It  required  that  we  charge 

2  5  the  standard  price  plus  incremental  costs,  incremental  costs 





1  balnq  ancillary  costs  related  to  physically  picking  up  and 

2  moving  materiel,  and  labor  and  handling  costs,  so  to  speak, 

3  and  transportation. 

4  Q    And  by  "standard  price"  you  mean  either  the  last 

5  procurement  price,  or  the  price  published  in  the  AMDF? 

6  A    Exactly. 

7  Q    And  in  most  cases,  that  would  be  the  same? 

8  A    Normally  the  last  published  standard  price  would 

9  be  the  last  manufacturing  price  paid,  plus  some  Amy  costs 

10  added  into  that. 

11  Q    Did  you  ever  ask^^^^^^^^| f or  the  record,  for 

12  your  record  at  that  time,  whether  the  Economy  Act  was  being 

13  used? 

14  A    Yes,    as  a  matter  of  fact.   We  established  that  in 

15  the  very  early  days,  within  probably  the  first  72  hours  of 

16  getting  together  on  the  mission. 

17  Q    And  when  you  asked  him  that,  did  he  then  ask| 

^^^^Hto  verify  that? 

19  A    That  is  correct,  sir.   We  did  that,  again,  because 

20  ^^4^  "°^  have  the  standard  piece  of  paper  that  normally 

21  waM0K  cite  the  basis  for  asking  for  Amy  support.   So  I 

22  wanted  to  make  sure  there  weren't  any  glitchesT   Me~wore______ 

2  3  doing  the  same  thing  with  the  basis  for  transfer  that  we 

24  were  doing  with  establishing  a  nomenclature  and  a  price.   We 

2  5  were  making  sure  that  our  two  interests  were..^gual.   That 





1  is, .that  I  was  providing  what  he  wanted  in  accordance  with 

2  how  he  wanted  it. 

3  Q    And  when  you  and  Gen.  Russo  and  Tom  Taylor  had 

4  some  discussions  after  Col.  Lincoln  raised  the  issue  of 

5  replacement  costs,  did  Tom  Taylor  ever  give  his  legal 

6  opinion  that  you  could  not  charge  replacement  costs? 

7  A    Yes,  sir,  he  did. 

8  Q    And  did  you  communicate  that  back  to  Col.  Lincoln? 

9  A    Yes.   And  he  was  unhappy  with  that  decision,  but 

10  he  said  he  knew  we  would  have  to  live  with  it,  then. 

11  Q    Before  we  get  to  that  discussion,  did  Gen.  Rusao 

12  at  this  time  then  go  to  Gen.  Colin  Powell  to  discuss  this 

13  issue? 

14  A    No,  sir,  I  don't  believe  he  did  at  that  time. 

15  Q    Did  he  do  that  at  a  later  point  on  replacement 

16  costs? 

17  A    He  may  have.   My  memory  is  fuzzy  on  that  right 

18  now,  sir.   That  is  something  I'll  have  to  go  back  to  my 

19  notea  to  look  at.   I  think  what  is  important  is,  though, 

20  ^^^K¥>c«  I  got  back  to  Col.  Lincoln—I  do  think,  for  the 

21  i^Hpi,  Gen.  Russo  wanted  to  charge  a  higher  price.   He  said 

22  it  was  a  dam  shame,  if  I  might  quote  him,  that  we  couldn't 

23  charge  a  higher  price.   He  said,  but  Chris,  it  doesn't  look 

24  like  the  regulations  allow  us  to  do  anything  other  than 

25  charge  the  old  standard  price. 




1  He  also  said,  for  the  record — and  he  said,  and 

2  anyway,  he  said,  the  other  thing  is  that  he  said,  we're  not 

3  exactly  giving  away  a  brand-new  state-of-the-art  missile 

4  with  100  percent  of  its  useful  life  left.   He  said,  these 

5  lot  numbers,  as  I  understand  it,  he  said,  at  the  end  of — 

6  some  of  them  are  15  years  old,  and  some  of  them  only  hav 
^^^^^^^^H  of  life 

8  He  said,  what  we've  got  here  is  an  old  missile 

9  with  a  limited  range  that  is 

10  ^^^^^^^1  So  Col.  Lincoln  is  not  exactly  trading  one  for 

11  one.   He  said,  he's  going  to  get  a  brand-new  state-of-the- 

12  art  missile  with  a  very  long  extended  life  and,  he  said,  so 

13  he's  not  exactly,  you  know,  losing^^^^^^^^Bof  his 

14  inventory. 

15  But  he  still  was  unhappy  that  we  weren't  going  to 

16  be  able  to  put  back  into  the  Army  wholesale  inventory  the 

17  same  number  of  missiles  that  we  took  out. 

18  Q    Did  you  ever  get  a  sense  of  whether  the  Army 

19  leadership  itself  was  happy  with  that  decision? 

20  „>:  A    Hy  interface  with  the  Army  leadership  daily  was 

21  G«i|^°  Russo,  and  he  would  normally  reflect  to  me  what  the 

22  feelings  of  the  leadership  were.   I  got  no  feeling  from  him 

23  at  all  at  any  time  in  this  that  there  was  anybody  above  him 

24  that  was  unhappy  with  that. 

25  MR.  SAXON:   Let's  go  off  the  record  a  moment. 





1  [Discussion  off  the  record. ] 

2  [Whereupon,  a  brief  recess  was  taken.] 

3  BY  MR.  SAXON:   (Resuming) 

4  Q    Major,  while  we  were  off  the  record  I  think  that 

5  you  in  fact  said  you  did  recall  that  when  the  issue  of 

6  replacement  costs  came  up  and  you,  Tom  Taylor,  and  Gen. 

7  Russo  had  some  discussions  and  conferred  about  this  issue, 

8  that  in  fact  Gen.  Russo  did  see  Gen.  Powell  at  some  point? 

9  A    Yes,  sir;  that  is  my  recollection. 

10  Q    Tell  us  about  that. 

11  A    Sir,  after  Gen.  Russo  went  to  see  Gen.  Powell,  the 

12  issue  was  he  was  going  to  clarify  with  Gen.  Powell  that  the 

13  Economy  Act  was  the  proper  basis  for  transfer.   Gen.  Powell 

14  got  back  to  him  and  assured  him  that  that  was  a  proper  basis 

15  for  the  transfer. 

16  After  that  particular  meeting.  Gen.  Russo  ceune 

17  back  and  met  with  me  that  same  day.   I  was  waiting  while  he 

18  went  to  see  him. 

19  Q    So  Russo  and  Powell  had  a  face-to-face  meeting? 

20  ^Kr         They  had  a  face-to-face  meeting  to  discuss  that 

21  ^4|p|^*   Once  that  had  been  accomplished — that  is,  that  we 

22  had  clarified  that  that  was  the  proper  statute — at  that 

23  point  we  became  locked  in  on  our  decision  that  since  the 

24  Economy  Act  pricing  rules  were  very  clear  in  the  Army 

2  5  Recfulation  AR37-60,  there  was  nothing  to  do  but  charge  the 





1  last  published  standard  price. 

2  As  I  recall,  the  one  other  thing  that  Gen.  Russo 

3  asked  me  to  do  on  that  was  to  verify  with  Col.  Lincoln  that 

4  the  standard  price  published  was  a  correct  price,  and  we  did 

5  that.   At  that  point,  we  went  forward. 

6  He  weren't  done  with  the  pricing  issue  yet,  of 

7  course,  on  the  basic  TOWs.   It  only  was  a  few  days  later  in 

8  this  dynamic  environment  until  George  Williams  called  me  up 

9  to  tell  me  the  truth  was  changing  again;  that  although  he 

10  had  committed  himself  to  outfitting  2300  basic  TOWs  in 

11  Condition  Code  N  with  a  MOIC,  it  turned  out  now  that  Hughes 

12  could  not  manufacture  the  MOICs  fast  enough  to  meet  the  Army 

13  deadline  of  having  these  missiles  ready  within  a  short 

14  number  of  weeks. 

15  Q    Are  we  into  the  third  week,  now? 

16  A    Yes,  we  are  sir,  more  or  less. 

17  Q    Before  we  go  into  the  issue  of  the  changing  the 

18  warhead,  after  Gen.  Russo  met  with  Gen.  Powell  and  the  issue 

19  of  r^laceaent  costs  was  put  to  rest,  did  you  communicate 

20  *^^0**^^  ^°  ^°^-    Lincoln? 

21  ^SP'^    '^*  BAB^  dayr  sii^« 

22  Q    And  at  any  point  in  that  time,  or  was  it  later, 

23  when  George  Williams  asked  you  if  the  customer  would  prefer 

24  the  ITOW,  the  improved  TOW  missile? 

25  A    That  came  up  when  the  next  discussion  surfaced. 

ame  up  wnen  the  next  disc 






1  Th«  discussion  came  up  at  the  time  when  we  found  out — excuse 

2  me.   I  want  to  say  to  correct  the  record  here,  again  I  kept 

3  notes  on  this,  that  discussion  either  came  up  at  the  time 

4  that  the  Condition  Code  N  surfaced,  or  it  came  up  later  when 

5  we  retrofitted  some  ITOW  missiles.   I'm  not  precise  now.   I 

6  could  go  back  and  check  for  you  and  look  at  my  notes. 

7  Q    I  understand,  although  I  don't  think  it's  material 

8  as  to  precisely  when  it  came  up  in  connection  with  this 

9  issue. 

10  A    The  substance  of  the  issue  was  that  George 

11  Williams  asked  me  to  go  back  to  the  customer,  and  the  whole 

12  issue  was  we  didn't  have  enough  of  Condition  Code  A  basic 

13  vanilla  TOWs  right  now  to  support  the  short  requirement. 

14  Could  I  go  back?  We  offered  the  other  missiles  to 

15  the  Agency.   I  did  that  ^°^^^^^^^^B   ^^  came  back  very 

16  quickly  after  checking  with^^^^^^^^H|and  turned  them  down 

17  and  said,  no,  all  they  were  interested  in  was  the  basic 

18  vanilla  TOWs. 

19  Q    So  they  were  offered  an  improved  product — 

20  ^^IC'    ^^^  ITOWs — 

21  ^1^    — ^^^   they  would  have  been  at  a  higher  cost. 

22  A    Yes,  sir.   And  it  would  have  been  at  those  costs 
2  3  that  Col.  Lincoln  was  quoting.   It's  important,  again  for 

24  the  record,  that  both  the  ITOW  and  the  TOW-2  were  still  in 

25  production,  and  we  would  have  then  been  able  to  charge 




1  replacement  costs.   Under  the  Army  pricing  rules,  if  an 

2  items  is  still  in  production,  you  charge  the  latest 

3  replacement  cost  for  it. 

4  Q    And  as  opposed  to  $3169,  or  with  the  $300  MOIC 

5  $34  69,  what  would  we  have  been  talking  about? 

6  A    $8000  to  $11,000,  depending  on  the  configuration 

7  of  the  improved  TOW  model  charged. 

8  Q    Okay.   Now  Mr.  Williams  gets  back  to  you  and  says, 

9  we  don't  have  enough  MOICs  because  Hughes  can't  manufacture 

10  them  fast  enough.   What  alternatives  did  you  discuss  with 

11  him? 

12  A    Okay.   The  principal  alternative  that  he  offered 

13  to  me  at  that  time  was  that  he  had  some  ITOW  missiles 

14  sitting  out  at  the  Iowa  Army  Ammunition  Plant,  and  he  said 

15  they  had  a  rocket  motor  on  them  that  would  do  the  job.   And 

16  it  was  the  rocket  motor  that  was  the  faulty  part  of  the  TOW 

17  missile,  not  the  missile  head. 

18  Q    Now  TOW  is  really  two  parts? 

19  A    It's  in  two  parts,  sir.   It's  a  warhead,  and  a 

20  SbH||  motor,  held  together  by  six  little  screws.   It's  that 

21  ^Hbi.   All  the  complicated  part  of  the  mechanism  is  the 

22  rocket  motor. 

23  He  said  he  had  some  other  rocket  motors  that  he 

24  could  retrofit  for  me.   He  wanted  my  assurances  that  I  was 

25  willing  to  do  that  and  was  willing  to  pay  for  the  costs  of 






























hauling  the  missiles  from  Iowa  to  Anniston,  which  now  you're 
talking  about  going  from  the  State  of  Iowa  to  the  State  of 
lower  Alabama,  and  the  costs  of  separating  the  missile  and 
the  warhead  and  retrofitting  the  motors  on.   Also,  you  had 
the  cost  of  taking  the  old  rocket  motor  off  the  faulty 

So  you  had  a  lot  of  work  here.   I  went  up  to 
discuss  that  whole  proposal — that  was  one  of  the  proposals 
he  offered  me,  John.   As  I  recall,  there  were  a  couple  of 
other  ones  that  day. 

Q  Did  you  take  that  proposal  tc 

A    I  took  it  to  Gen.  Russo  first.   To  tell  you  the 
truth,  I  was  alarmed  about  taking  any  more  changes  in  the 
truth  ^o^^^^^^^^^^^H  especially  since  I  had  been 
admonished  only  a  few  days  earlier  not  to  come  back  any  more 
with  any  more  changes  in  the  truth. 

But  I  went  up  and  told  Gen.  Russo  all  that  we  were 
doing.   I  think  he  had,  one  concern  he  had  was,  he  says, 
what  are  we  going  to  do  with  these  ITOW  warheads?  Now  this 

improved  part  of  the  mechanism.   I  told  him  I  had 
gcVVVn— I  got  back  with  George  Williams,  and  then  George 
Williams  says,  I  believe  I  have  a  potential  FMS  customer  for 
these  warheads  without  any  rocket  motor  at  all. 

It  was  some  Middle  East  country  at  the  time  that 
we  did  business  with  regularly.   I  don't  know  yet  whether  we 





hav«  sold  those  now.  A  lot  of  time  has  passed  since  all 
that  event  took  place.  But  Gen.  Russo  bought  off  on  the 
concept,  subject  of  the  ability  of  the  CIA  to  pay  for  it. 

George  had  given  me  some  ballpark  figures  on  costs 
to  do  the  retrofitting.   I  went  back  toj 
with  this.   Once  again,  we  had  umbrage,  and  disgust,  and 
dismay,  and  he  told  me  once  again  he  would  have  to  go,  and 

8  he  really  didn't  know  whether  he  could  do  it  or  not,  but  he 

9  would  see-- 
Q    He  would  have  to  go  where? 
A    He  would  have  to  go  ^°^^^^^^^H^  ^^°   would  then 

again  have  to  go  deal  with  the  White  House.   He  again  urged 
me  that  he  was  having  to  deal  with  the  White  House  on  each 
change  in  truth — meaning  that  he , ^^^^^^^^^H  has  having  to 

15  do  that.   But  that  is,  the  Agency  was  being  forced  to  go  to 

16  the  White  House  on  any  changes.   And  he  said,  please,  let's 

17  make  sure  these  incremental  costs,  he  said  even  let's  pad 

18  them  a  little  bit  in  terms  of  add  a  few  more  thousands  of 

19  dollars  on  th«a  so  we  don't  have  to  go  back  in  for  $10,000 

20  ord^OfOOO  out  of  a  half  a  million. 

21  jfe'-     As  I  recall,  the  figure  to  do  that  work  was  about 

22  $400,000  in  incremental  costs.   In  the  end,] 
2  3   did  agree  to  fund  all  of  that,  and  I  called  back  George 

24   Leachman — Chris  Leachman  and  George  Williams,  and  told  them 
2  5    to  proceed. 




























Once  again,  they  had  conunitted  themselves  that 
they  could  get  the  work  done  in  time.   I  would  mention  that, 
although  back  in  late  January  we  thought  we  might  be  all 
done  with  this  mission  as  early  as  the  end  of  February,  by 
the  time  we  had  got  to  the  business  of  agreeing  to  retrofit 
missiles,  three-and-a-half  weeks  had  already  passed.   But 
we're  still  leaning  forward  in  the  foxhole,  so  to  speak. 
That  is,  it  is  still  being  ready  to  support  it  a  day  or  two 
ahead  at  a  time. 

Q    We  are  between  the  first  and  second  shipments? 

A    Yes,  we  are.   We've  passed  the  first  shipment  at 
14  February.   The  business  in  retrofitting  the  missiles 
probably  took  place,  as  I  recall,  about  the  third  or  fourth 
week  of  February. 

Q    Now  when  you — I  guess  you  got  approval  froml 

A    Yea.   He  told  me  he  couldn't  get  the  money  right 
away.   That  was  an  issue  at  the  time.   He  said,  I  can't  get 
the  paperwork  to  you  right  away,  he  says,  but  I'll  give  you 
The  agreement  that  he  and  I  had,  and  again  a 
in  of  high  honor  and  good  standing  with  me  as  he  had 
worked  on  many  complex  things  with  me  and  had  never  let  me 
down,  said  if  for  any  reason  we  can't  get  this  additional 
money  from  the  White  House,  or  the  mission  aborts,  or  both, 
he  said,  I  will  personally  make  this  money  available  to  you 

^n*   p«pez 

j4b   ' 




1  out  of  other  funds. 

2  Since  he  was  a  man  of  honor,  I  told  Gen.  Russo  I 

3  was  going  to  go  ahead  and  take  his  word,  even  though  we 

4  didn't  have  the  piece  of  paper.   And  Gen.  Russo  I  think 

5  asked  me  at  the  time,  well,  has  he  ever  let  you  down  before? 

6  And  I  said,  no,  never.   And  on  that  basis,  the  credibility 

7  of  a  good  man,  we  went  ahead. 

8  Q    To  your  knowledge,  was  that  the  amount  of  money 

9  which  MICOM  puts  at  $377,000  which  they  committed  out  of 

10  their  own  operating  budget?   Do  you  have  any  knowledge  of 

11  what  I'm  referring  to? 

12  A    Yes,  sir,  that  is  the  ficfure.   And  that  is  the 

13  message.   I  said,  about  $400,000,  but  that  is  the  figure.   I 

14  would  mention  for  the  record  that  the  only  reason  that  MICOM 

15  had  to  fund  that  out  of  their  general  budget,  we  told  them 

16  early  on  in  this  mission — that  message  went  out  in  late 

17  February,  mid-  to  late  February— that  as  soon  as  they  billed 

18  us,  we  would  pay  them  within  30  days.   That  was  our 

19  agM«B«nt  with  them,  which  is  the  standard  government 

20  )M^El*9  arrangement  between  all  agencies. 

21  Wip  It  was  not  until  late  May,  early  June,  that  they 

22  actually  saw  fit  to  bill  us.   The  fact  that  they  carried 

2  3  those  expenses  out  of  their  own  operating  budget  was  really 

24  a  fault  of  the  billing  mechanism  at  MICOM  and  not  the 

25  Department  of  Army.   I  would  mention  again  for  the  record 





1  thst^  once  we  presented  the  bills  to  the  Agency,  they  were 

2  paid  extremely  promptly. 

3  Q    For  what  it's  worth,  would  you  have  any  knowledge 

4  of  the  fact  that  to  this  date  they  have  not  been  reimbursed 

5  that  $377,000? 

6  A    That  does  not  sound  correct  to  me.   I  know  that 

7  when  I  had  left  there,  that  every  bill  that  they  had 

8  presented  to  us  had  been  paid,  as  presented,  and  that 

9  bill — again  I  would  have  to  look  at  the  figures,  John,  but 

10  a  recollection  of  mine  is  that  the  incremental  costs  that 

11  they  did  bill  us  for  we  had  paid  by  the  time  I  had  left. 

12  MR.  KREUZER:   Could  I  just  interject  here? 

13  At  any  time  in  this  process  did  any  fund  citing, 

14  or  billing,  or  any  similar  type  financial  activity  come  from 

15  or  originate  with,  or  involve  Army  Materiel  Command? 

16  THE  WITNESS:   Not  on  Project  Snowball  at  all.   In 

17  fact,  for  the  record — I  mentioned  this  in  my  testimony  in 

18  April — early  on  Col.  Lincoln  surfaced  a  concern  with  me  that 

19  he  4^tn't   want  to  be  working  on  this  very  complex  and 

20  4^^^Hp***  project  without  having  the  AMC  leadership 

21  dHHld.   He  said,  if  we  would  not  get  AMC  headquarters 

22  involved,  that  he  was  going  to  ask  Gen.  Burbules,  for  the 

23  record  the  Commander  of  Missile  Command. 

24  I  went  to  Gen.  Russo  with  that,  and  he  called 

25  while  I  was  in  his  office  and  talked  to  Gen.  Thompson,  who 





1  is  th«  four-star  General  in  charge  of  Army  Materiel  Command, 

2  and  told  him  that  I  was  working  with  Col .  Lincoln  on  a  very 

3  quiet  project  and  appreciated  his  good  support,  and  that 

4  issue  then  was  laid  to  rest. 

5  That  was  the  only  involvement  throughout  this 

6  project  with  Army  Materiel  Headquarters. 

7  MR.  SAXON:   Let's  go  off  the  record  a  moment. 

8  [Discussion  off  the  record.] 

9  BY  MR.  SAXON:   (Resuming) 

10  Q    Major  Simpson,  when  the  approval  from  the  Agency 

11  came  for  the  retrofitting  and  transportation,  did  you 

12  communicate  that  to  the  folks  at  MICOM? 

13  A    Yes,  sir,  I  did;  the  same  day. 

14  Q    And  did  there  come  a  time  shortly  thereafter  when 

15  you  had  a  conversation  with  Mr.  Williams,  the  Deputy  Project 

16  Manager-TOW,  about  changing  the  price  yet  again  to  take  into 

17  account  that  in  essence  one-half  of  the  missile  was  going  to 

18  be  an  improved  version? 

19  A    Yes,  sir,  we  did  have  such  a  conversation. 

20  ijKMJk        And  did  you  agree  that  you  would  take  that  forward 

21  aflHpla  what  could  be  done? 

22  A    Yes,  sir,  I  did;  although  I  told  them,  personally 

23  I  was  against  changing  it.   I  remember  that  conversation.   I 

24  may  have  had  it  with  Col.  Lincoln,  or  it  may  have  been  with 

25  Chris  Leachman,  but  one  of  the  three  principals  in  the 




1  offic*.   I  said,  guys,  I'm  not  willing  to  even  surface  that 

2  issue  to  the  DSLOG,  unless  you  want  me  to  do  it. 

3  Q    Did  you — 

4  A    And — Oh,  I'm  sorry. 

Q    Did  you  talk  toj^^^^^^^^Habout  it? 

6  A    I  did  not  talk  to^^^^^^^^Babout  that  at  all. 

7  I  don't  believe  the  Agency  ever  got  involved  in  that.   I  do 

8  know  that  Col.  Lincoln  did  do  what  I  asked  him.   I  was  so 

9  disgusted  at  this  point  with  the  events  that  had  transpired, 

10  I  have  got  many  other  missions  going  on,  and  I  think  that 

11  the  concern  was  I  just  didn't  have  time  every  day  to  deal 

12  with  a  changing  set  of  ground  rules. 

13  I  said.  Col.  Lincoln,  if  that  issue  is  going  to 

14  get  surfaced  to  the  DSLOG  level,  I  said,  it  needs  to  be  done 

15  from  the  MICOM  end;  and  I  do  know  that  that  did  happen,  that 

16  Col.  Lincoln  went  to  one  of  his  bosses,  one  of  the  Generals 

17  at  MICOM,  and  they  did  call  and  talk  to  Gen.  Russo. 

18  Q    I  know  that  a  lot  of  these  particular  details  are 

19  hard  to  recall,  but  my  notes  from  when  we  met  in  April 

2  0  1  n0r>te  that  when  this  issue  was  raised  and  you  had  these 

21  dt^iusions,  I  think  you  said  with  Mr.  Williams,  that  he 

22  said  the  rocket  motor  on  the  ITCH  had  a  longer  range,  and 

23  that  he  wanted  to  be  paid  more  for  the  improvement? 

24  A    I  do  recall  that  he  did  say  that. 

25  Q    And  my  notes  reflect  that  you  talked  tc 





1  ^^^^^^H  and  he  said  that  he  really  could  care  less  that 

2  something  along  the  lines  that  if  they  wanted  to  give  him  a 

3  better  one,  fine,  but  he  didn't  order  it  so  he  wasn't  going 

4  to  pay  for  it. 

5  A    Sir,  I  do  recall  that.   Now  my  memory  is 

6  refreshed.   That  was  what  was  discussed. 

7  Q    Now  at  this  stage,  I  think  we  have  even  another 

8  complicating  factor.   That  is,  that  discussions  began  to 

9  focus  on  a  different  stock  number  for  a  basic  TOW  with  MOIC. 

10  What  can  you  tell  us  about  that? 

11  A    Another  conversation  in  these  days  of  changing 

12  environments  and  facts  was  that  George  Williams  called  me  up 

13  to  say  that  they  had  done  some  more  study,  and  they  now  have 

14  surfaced  the  fact  that  there  is  a  new  stock  number  for  MOIC. 

15  I  guess  the  gist  of  his  conversation  was  to  the  effect  that 

16  the  $3169  purchase  price  for  the  MOIC,  plus  the  $300  MOIC, 

17  had  turned  into  a  price  that  all  of  us  now  know  never 

18  existed,  and  it  was  somewhere  on  the  order  of  about  $8000. 

19  Q    All  right.   Let  me  see  if  I  can — 

20  dF'^    I^  ^  could  help  you,  I  cc-  ^  walk  you  through  what 

21  2Ml|p|lly  happened  back  in  those  years  in  the  late  '70s. 

22  g    Good. 

23  A    In  the  late  '70s  after  the  flyback  problem 

2  4  surfaced,  at  that  time  Hughes  was  making  a  later  version,  I 

25  would  say  a  later  production  run  of  the  missile. 




1  Q    of  the  basic  TOW,  still? 

2  A    Of  the  basic  TOW.   They  redesigned  the  design, 

3  because  the  MOIC  that  was  being  provided  to  Anniston  to  put 

4  on  was  kind  of  like  a  slap-on  modification.   The  engineers 

5  at  Hughes  redesigned  the  basic  configuration  of  the 

6  missile — 

7  Q    To  build  the  MOIC  in  it? 

8  A    To  build  the  MOIC  right  into  the  system.   It  was 

9  kind  of  a  quick-fix  engineering.   But  now  it  is  part  of  the 

10  assembly  process  of  a  brand-new  item.   That  particular 

11  missile — which  there's  some  doubt  at  MICOM  whether  that 

12  should  have  ever  happened — was  now  coming  off  the  production 

13  line  and  given  a  new,  different  stock  number  by  the  Army. 

14  Q    As  a  new  item? 

15  A    As  a  new  item.   And  the  price  was  around  $8000,  as 

16  recall. 

17  Q    Would  it  have  been  $8435? 

18  A    That  sounds  like  a  figure  I  remember. 

19  I  tried  to  argue  with  George  at  the  time  that  that 

20  n^^Klwve  been  true  for  a  missile  that  came  off  the 

21  pJHBtlon  line  years  later,  I  said,  but  are  any  of  these 

22  15-year-old  missiles  that  you're  giving  me,  were  any  of  them 

23  priced  to  the  Army  at  $8439? 

24  And  George  said,  no.   And  I  said,  well,  as  far  as 

25  I'm  concerned,  an  old  missile  with  a  MOIC  welded  onto  it 





1  datH^  at  MOIC,  I  said,  is  it,  or  isn't  it  costing  the  Army 

2  $300  to  do  that?   And  he  said,  it  is.   I  said,  well,  I'm  not 

3  willing  to  give  you  any  more  money  for  that,  and  I'm  not 

4  willing  to  surface  that  issue,  either,  up  the  chain  of 

5  command . 

6  Q     Okay.   Let  me  review  what  you've  just  said.   After 

7  the  flyback  problem  was  created,  Hughes  began  to  manufacture 

8  the  TOW  missile  with  the  MOIC  in  it,  which  MICOM  chose  to 

9  classify  in  the  AMDF  as  a  new  item  and  gave  it  a  new 

10  national  stock  number,  and  a  new  price,  the  price  of  $8435. 

11  A    Yes,  sir;  that's  correct. 

12  Q    So  that  if  someone  at  Anniston  Army  Depot,  which 

13  we  understand  to  have  happened,  were  to  have  been  told  "we 

14  want  a  basic  TOW,"  and  it  were  to  have  a  MOIC,  they  could 

15  look  in  the  AMDF  and,  whether  this  should  be  the  case  or 

16  not,  could  find  a  legitimate  price  for  a  basic  TOW  with  MOIC 

17  of  $8435? 

18  A    They  could  do  that,  although  there  was  some 

19  r«ir«l«tion  at  MICOM  that  there  was  never  actually  a  price 

20  idHi^*^  approximated  the  AMDF  price;  that  it  was  something 

21  o4^H^ihan  that  price,  but  it  was  a  price  higher  than, 

22  considerably  higher  than  the  basic  vanilla  TOW  with  a  MOIC 

23  in  it. 

24  Q    But  if  they  used  the  computer  system  that  existed 

25  at  Anniston  Army  I^ypct  ATf*  ff^iiFikP^-if-ili?  number  for  a  TOW 



1  wiHit  MOIC,  they  would  get~ 

2  A    The  model  number.   They  would  have  got  a  $8439 

3  price,  yes,  sir. 

4  Q    And  as  you  walked  through  this  with  MICOM,  what  we 

5  were  doing  was  not  involving  those  missiles  at  all,  but 

6  taking  the  missiles  purchased  by  the  Army  for  $3169  and 

7  simply  welding  the  $300  MOIC  on? 

8  A    Yes,  sir;  that's  correct. 

9  Q    But  the  two  items  did  have  different  national 

10  stock  numbers? 

11  A    A  basic  vanilla  TOW  with  a  MOIC  did. 

12  Q    And  did  anyone  at  DA  level  with  whom  you  were 

13  dealing  realize  that  when  you  put  a  MOIC  on  a  basic  TOW, 

14  according  to  the  AMDF,  that  it  had  a  different  national 

15  stock  number  and  therefore  a  different  price? 

16  A    No,  sir;  no  one  at  DA  did,  at  that  time.   I  know 

17  that  Gen.  Russo  late  in  November  of  '86  ceune  to  the 

18  conclusion  that,  gee,  if  we  had  only  known. 

19  Q    And  at  this  point,  up  until  this  point,  no  one  at 

20  l^^K^Q^^v? 

21  ^9P    ^°   °"^  ^^  MICOM  ever  told  us  all  these  details. 

22  This  wealth  of  data  that  we  have  just  discussed  all  surfaced 

23  during  the  November-December  '86  time  frame. 

24  Q    How  did  this  come  to  Mr.  Williams'  attention? 

25  A  When  yeuwsijt^ibow  did  this  come,    sir? 



1  Q    Back  in  late  February.   He  brought  this  to  you. 

2  How  had  it  come  to  his  attention? 

3  A    I'm  not  quite  sure,  sir.   Through  one  of  the 

4  people  that  works  for  him.   He  never  revealed  those  details 

5  to  me. 

6  Q    At  this  point,  you  took  this  information,  I 

7  believe,  to  Gen.  Russo.   Is  that  correct? 

8  A    Yes,  sir. 

9  Q    Did  he  then  have  a  conversation  with  Gen. 

10  Burbules,  the  head  of  MICOM? 

11  A    Sir,  he  may  have  had  that  conversation  with  th« 

12  Deputy  Commanding  General.   I  believe  that  Gen.  Burbules  may 

13  have  been  away.   He  may  have  had  it  with  Gen.  Burbules. 

14  That  is  possible.   One  of  the  principals  there  at  MICOM, 

15  either  the  Commander  or  the  Deputy  Commander.   The  issue  was 

16  discussed. 

17  Q    As  to  whether  to  pay  the  $3469 — 

18  A    Or  some  other  price. 

19  Q    And  did  anything  change? 

20  Mgk         Nothing  changed.   Gen.  Russo  told  me  that — he 

21  clflBl  ■«  up  to  his  office.   We  were  meeting  almost  daily  on 

22  this  project—and  told  me  that  the  issue  of  price  had  come 

23  up.   He  said,  I  was  worrying  about  the  mission  being  hurt, 

24  damaged,  or  otherwise  deteriorating  because  of  all  of  the 

25  changing  stories.   He  said,  I  couldn't  see  really  how  we 




could  charge  more  than  $3469.   And,  he  said,  I  told  the 
General  that  he  spoke  to,  he  said,  the  price  is  going  to 
rest  as  it  was. 

Q    And  at  some  point  did  you  get  back  with 

in  this  time  frame,  and  he  told  you  he  didn't 
want  any  more  changes? 

A    Well,  by  the  tine  this  conversation  that  Gen. 
Russo  had  with  the  Commanders  at  MICOM  was  going  on,  we  had 
already  gone^^^^^^Hwith  three  more  changes.   I  mean, 
those  changes  that  we've  already  discussed.   I  think  he 

11  would  of  just  about  had  apoplexy  had  I  gone  back  with 

12  another  change.   ButHJUJ^^^^^^and  I  have  worked  together 
for  several  years.   If  I  had  actually  had  a  change,  I  think 
he  would  have  done  his  best  to  accommodate  me. 

Q    When ^^^^^^^^^^H|  expressed,  at  whatever  point, 
some  dissatisfaction  that  things  kept  changing,  did  you 
communicate  that  back  to  Col.  Lincoln? 

A    Yes,  sir,  I  did.   As  a  matter  of  fact,  that  was 
what  led  to  when  Col.  Lincoln  and  I  discussed  the  business 

was  not  willing  to  surface  another  change  in  the 
txVH  to  the  Ainny  leadership.   I  says,  as  far  as  I'm 
concerned,  you  know,  that  needs  to  come  from  the  MICOM 
level.   I  thought,  let  you  guys  go  up  and  face  the  lions  and 
explain  why  the  truth  keeps  changing. 

Q    And  was  that  his  phrase?   Col.  Lincoln  told  you 

IS  that  hxs  phrase?   Col. 




1  that  the  truth  kept  changing? 

2  A    No,  that  was  my  phrase  for  him.   I  said, 

3  geezuschrist,  you  know  here  we  are.   When  we  told  you  the 

4  first  day  that  the  highest  levels  of  the  Army  leadership 

5  were  looking  at  this,  you  know,  why  couldn't  we  be  straight 

6  the  first  time.   I  said,  now  we've  gone  through  three 

7  different  changes,  and  the  truth  keeps  changing.   I  pointed 

8  out,  even  on  the  MOIC  business  that  when  they  had  asked  me 

9  for  the  money  to  pay  for  the  2300  MOICs,  I  said,  nobody  even 

10  bothered  to  check  with  Hughes  at  that  time  to  see  if  they 

11  could  meet  the  deadline  scheduled.   I  said,  you  find  that 

12  out  later. 

13  So  I  guess  my  point  from  an  action  officer's 

14  viewpoint  was,  I  was  frustrated  by  what  I  saw  as  kind  of 

15  loose  coordination.   It  was  my  opinion  that  any  more  of 

16  those  changes  in  the  story  needed  to  be  surfaced  from  their 

17  level  to  the  Army  leadership. 

18  Q    Now  let  me  go  back  quickly  and  clean  up  one  or  two 

19  1004^  ends  that  may  have  been  left  on  the  first  shipment 

20  i^^^Kj^tually  took  place  on  the  14th  of  February. 

21  ^^Bm^   ^  y°"  alluded  to  earlier,  these  did  not  actually 

22  get  airlifted  from  Redstone? 

2  3        A    No,  sir,  they  did  not. 

24  Q    Tell  us  what  happened  with  regard  to  that  plan? 

25  A    Sir,  briefly,  because  of  the  period  of  29  January 









to  13  February  that  we  were  changing  the  delivery  date  one 
day  at  a  time  because  of  delays  and  problems  with  follow-on 

from  ^^^^^^^^^^^^^^Hl^^H  asked 
the  afternoon  of  the  12th  of  February,  could  I  get  with  MAC 
and  see  if  they  would  support  us  on  the  14th.   I  said,  no. 
Hell,  no. 

When  I  went  back  to  him  with  that,  he  said,  well, 
we're  really  in  a  jam,  he  said,  because  now  we  have  the 
follow-on  transportation  for^^^^^^^^^Hand  we  can't 
change  that.   He  said,  how  are  we  going  to  get  these 

We  called  and  talked  and  I  said, 
do  you  think  we  can  truck  something  from — 
we  had  hauled  stuff  before  f ron^^^^^^^^H f rom  Redstone, 

Redstone  l^^^^^^^^^Psaid , 
get  ahold  of  my  favorite  trucking  company  and  see  if  they 
fiiake  it  in  the  time  frame. 

And  that  was  Baggett  Transportation? 
A    Yes,  sir.   That  was  Baggett  Transportation, 
called  me  back  shortly  that  same  day  and  said  Baggett  can  do 
it.   Where  do  they  need  to  go?   And  I  did  some  dealings  with 

the  Baggett  dispatcher,  and  we  got  them  guided  into  our 




























remote  area  at  Redstone  where  the  missiles  were  being 

The  upshot  of  all  of  it  was  that  I  was  listed  as 
the  consignor  from  Redstone^H^^^^^^^^^^^f  Actually,  they 
were  never  told  at  Redstone  that  they  were  going 

Again,  there  would  have  been  no  reason  in  the 
white  world  for  TOW  missiles  to  go  to, 

Q    For  the  record,  are  you  aware  that  Baggett 
Transportation  has  as  its  slogan  "Don't  Mark  It  Rush.   Tag 
It,  Baggett!"?  Have  you  ever  heard  that? 

A    No,  sir,  I'm  not. 
''4:Q         Well,  for  the  record  that's  true. 

*-      All  right.   You're  on  the  ground  at  Redstone  on  13 
February.   Baggett,  I  believe,  arrived  around  6:00  o'clock 
p.m.   Is  that  correct? 

A    Yes,  sir,  that  is  correct. 

Q    Then  you  started  loading  around  7:00  o'clock? 





1  A    Yes,  sir,  and  it  took  us  until  probably  about  1:30 

2  in  the  morning  to  finish  this.   This  is  a  very  complex 

3  procedure,  because  it  isn't  just  throwing  boxes  on  trucks. 

4  Because  of  the  nature  of  the  cargo,  each  box  of  missiles  and 

5  each  box  had  one  missile  in  it — 

6  Q    There  were  1000  boxes? 

7  A    1000  boxes  that  are  a  crate  that  are  about  4  foot 

8  long  and  a  foot  length  by  width.   It  was  a  foot  square,  and 

9  about  4  foot  long,  and  weighed  a  lot  of  pounds,  and  it  had 

10  to  be  blocked  and  braced.   So  you  actually  have  carpentry 

11  work  going  on  on  each  different  box.   Plus,  the  weight  heul 

12  to  be  equally  distributed  within  the  trucks. 

13  Q    Were  there  90  tons,  for  shipping  purposes? 

14  A    That  sounds  correct. 

15  Q    And  was  an  MI  company  helping  load  the  trucks? 

16  A    Yes,  sir;  it  was  an  MI  company  that  was  stationed 

17  at  Redstone  Arsenal . 

18  Q    And  about  what  time  did  the  last  truck  arrive? 

19  A    Sir,  as  I  recollect,  about  1:30  in  the  morning. 
^^  im^         Then  I  believe  you  told  us  in  April  that  you  and 

21  atff^^lM&chm&n   left  about  2:00  o'clock  to  go  to  your 

22  respective  places  to  get  a  little  sleep,  and  came  back 

23  around  7:00?   Is  that  correct? 

24  A    Yes,  sir.   And  the  objective  of  meeting  again  at 

25  7:00  was  to  have  me  sign  a  sh_ip£ing_ document,  a  DoD  shipping 


i   sign  a  snipping  docum« 





document  that  he  had  prepared  for  me. 

Q    And  that's  7:00  a.m.  in  the  morning,  the  14th? 

A    Yes,  sir. 

Q    And  that  dociiment  was  signed;  and  did  you  keep  all 
copies  but  one? 

A    Yes,  sir,  I  did. 

Q    And  you  had  carried  down  with  you,  I  think,  an 
individual  from  the  Agency?   Is  that  correct? 

A    Yes,  sir. 

Q    Who  was  that? 

name  was^^^^^^^^^^^H  They  were 

12  reluctant  participant  in  the  witnessing  of  this  first  load, 

13  but  Gen.  Russo  had  asked  me  to  make  sure  that  legal 
ownership  for  these  missiles  was  transferred  at  Redstone. 
The  purpose  of ^^^^^^^^^^^^^^^^^Halso  known  alias 
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^H  his 
purpose  was  to  accept  signature  responsibility.   And  if 
anyone  wanted  to  look  at  the  record,  the  retained  receipts 
in  ay  office       show  that^^^^^^^^^^^^^^^^^  from 

20  CXA||ld  sign  for  those  missiles  on  the  morning  of  the  14th 

21  of^ftbruary.  ^^^^ 

2  2        Q    And  you  got  a  receipt  from^^^^Halso  attesting 
2  3   to  his  receipt  of  the  documents  which  DA  had  received  in 

24  affecting  the  shipment?   Is  that  correct? 

25  A    Sir,^^^^^^^Hkept  none  of  the  documents  from 






























th«  DA  shipment  from  Redstone^^^^^^^^^^^^^  If  your 
notes  show  that,  they're  in  error.   He  kept  no  documents  at 

Q    Okay.   And  once  the  mission  was  completed,  did  you 
ca  1  l^^^^^^^H  to 

Yes,  sir,  I  did.   I  also  called  Cen.    Russo. 

Sir,^^^^^^^^^Kind  I  talked.   Whether  it  was 
that  day  before  I  left  to  go  back  to  Washington,  or  that 
morning  down  at  Redstone,  I  did  talk  to  him  right  in  that 
time  frame. 

Q    To  tell  him  that  everything  had  gone  well? 

Yes,  sir. 

And  did  you  talk  tc 

At  length;  yes,  sir. 

Did  you  tell^^^^^^Hthe  transfer  had  taken 





A    And  at  about  what  time^^^^^^^Hbxpect  the 
trucks.   They  had  been  due  in  at  about  2:00  a.m.,  or  2:00 
p.^^  Saturday  afternoon,  when  they  left.   That  was  what  the 
dl^ll^cher  had  told  me  for  Baggett. 

Q  m^^^^^^^^l promise  to  call  you  and  tell  you  when 

the  trucks  got  there? 

sir,^^^^^^^^^^^^^Hdid  do 
And  what' 




A    ^^^^^^^^^^^^Oi^^^^^^^^Hsaid,    the  trucks 

2  that  you  were  sending  me  have  arrived  safely^^^^^^Hsaid, 

3  all  is  well.   I  got  one  more  call  on  that  operation,  and 

4  that  was  from^^^^^^^H^^^fthe  following  Monday  to  tell  me 

5  everything  had  lifted  out  and  had  gone  successfully. 

6  Q    He  was  tht 

7  A    Yes,  sir,  he  was. 

8  Q    And  did  he  say  something  like,  not  only  did  they 

9  lift  off,  but  they're  now  over  the  borders? 

10  A    Yes,  sir,  he  did. 

11  Q    And  would  that  be  the  first  time  when  you  knew  for 

12  sure  these  were  destined  to  go  outside  the  United  States? 

13  A    Sir,  that  was  the  first  time  I  knew  for  sure,  but 

14  even  from  the  early  days  from  the  mission,  from  the  first 

15  three  days,  I  knew  that  they  were  going  outside  the  country- 

16  I  was  99.5  percent  sure,  because  we  were  waiting  for  follow- 

17  on  transportation  by  air  from| 

18  There  would  have  been  no  us*  for  those  within  our 

19  bordara.  

20  -^  Q    And  did  you  ask^^^^^^^Hat  that  point  if  he 

21  uali  KXC  for  the  airlift? 

22  A    Yes,  sir,  I  did. 

23  Q         What  did  he  say? 

24  A  As   I   recall,    he  told  ne  he  used  a  private 

25  contractor.      Again,!  ik^MA^t^Uk  £K>BCMrB«(L about  defense 





1  transportation  channels.   The  reason  for  asking  about 

2  MAC  was  to  make  sure  that  DoD  was  off  the  hook.   Once  he  had 

3  told  me  that  he  had  not  used  MAC,  I  knew  that  we  were  clear 

4  and  free.   Really,  that  was  the  end  of  it  for  the  first 

5  phase  of  our  mission. 

6  MR.  KREUZER:   Did  he  mention  who  the  private 

7  contractor  was?  ^ 

8  THE  WITNESS:   No,  sir.   And  I  don't  want  to 

9  speculate  on  who  it  was.   They  used  a  variety  of  private 

10  contractors.  ^^^ 

11   MR.  KREUZER:   That  was  what  day?   What  day  did^^f 

12  ^^^^Htell  you  that  they  had  airlifted  out? 

13  THE  WITNESS:   17  February,  sir.   I  say  that, 

14  because  I  got  a  call  the  following  Monday.   Friday  was  the 

15  14th.   I  was  told  Monday  that  everything  was  gone. 

16  BY  MR.  SAXON:   (Resuming) 

17  Q    Let  me  cover — this  is  somewhat  out  of  the 

18  chronological  sequence — but  one  additional  item  on  the  issue 

19  of  Congressional  notification. 

20  ^^Bk"  ^   believe  there  was  a  point  at  which  Department  of 

21  tlilpktBy  civilian  and  military  leadership  continued  to  be 

22  concerned  about  the  issue  of  Congressional  notification,  so 

23  that  there  was  a  memorandum  drafted  which  went  to  Gen. 

24  Powell  on  this  issue.   Is  that  correct? 

25  A    Yes,  s ir.   As  a  matter  of  fact ,  I  believe  that  I 



1  drafted  that  memo  for  Gen.  Russo.   Gen.  Russo  and  I 

2  discussed  a  rough  outline  of  what  he  wanted  to  say.   I  went 

3  and  typed  it.   He  hand-carried  it  up,  and  he  brought  it  back 

4  down  to  me,  and  it  had  some  notes  written  on  the  margin  of 

5  the  finished  memo  that  said  it  had  been  discussed  with  Colin 

6  Powell. 

7  Later,  that  memo  went  up  one  more  time.   Later  in 

8  the  spring,  Maj .  Gen.  Powell  left  and  Admiral  Jones  took 

9  over  as  the  aide  to  the  SECDEF,  and  it  went  up  once  again  to 

10  let  Admiral  Jones  look  at  it. 

11  Q    And  a  memo  copy  I  think  of  that  was  provided  to 

12  Gen.  Arthur  Brown,  the  Director  of  the  Army  Staff,  Gen. 

13  Kavasa,  the  Executive  Assistant  to  the  Secretary;  and  to 

14  Col.  McDonald.   Is  that  correct? 

15  A    Yes,  sir,  that  is  correct.   It  also  went  to  Maj. 

16  Gen.  Sutter. 

17  Q    And  how  do  you  know  that? 

18  A    Because,  sir,  I  hand-carried  that  document  all 

19  around,  at  Gan.  Russo 's  request. 

20  ^ra    And  did  you  also  give  a  copy,  or  show  a  copy,  to 

21  ToJilliylor? 

22  A  Yes,    sir,    I   did. 

23  Q    Now  in  the  context  of  Congressional  notification, 

24  I  believe  you  told  us  in  April  that  the  day  after  Tom  Taylor 

25  gave  you  a  copy  of  Mrs.  Crawford,  the  General  Counsel's, 





























meBorandum  to  the  Secretary  on  this  issue;  that  you  had  a 
face-to-face  session  with^^^^^^^^^Vin  which  you  gave  him 
a  copy  of  the  Act  itself.   Is  that  correct? 
A    That  is  true,  sir. 
Q    Do  you  recall  what  you  told  him? 

MR.  SAXON:   Could  we  go  off  the  record? 

[Discussion  off  the  record.] 

MR.  SAXON:   Where  did  we  leave  off? 

THE  REPORTER:   "Question:   Do  you  recall  what  you 
told  him?" 

THE  WITNESS:   Sir,  the  question  then  was,  do  I 
recall  from  my  face-to-face  meeting  with^^^^^^^^^lon  the 
notification  issue  what  was  discussed?   Yes,  I  do. 

I  took  a  copy  of  the  Act  that  Mr.  Tom  Taylor  from 
Army  General  Counsel  had  copied  for  me  to  give  tol 

BY  MR.  SAXON:   (Resuming) 
Q    Which  Act  was  this? 

A    This  was  the  1986  Intelligence  Authorization  Act, 
addressed  the  requirement  of  notification  to  Congress 
■ore  than  a  $1  million  shipment  was  involved  of  arms 
outside  the  borders. 

^and  I  then  addressed  the  fact  that  it 
was  really  his  General  Counsel's  responsibility  to  advise 
the  leadership  on  the  requirements. 




























And,  I  said,  but  I  don't  have  any  face- to- face 
dealings  with  the  General  Counsel  of  the 

about  a  day  later,  it  could  have  been 
the  same  day  again,  these  things  fuzz  together,  he  got  bac)c 
to  me  and  told  me  to  get  out  of  it,  and  that  the  Agency  was 
handling  it.   He  assured  me  of  that,  because  I  was  concerned 

about  it.    

^^^^^^^^^^^l^^^l  w  i  th 
^^^^^^^^^^^^^^H  with 
although  a  lot  of  very  senior  people  in  the  Defense 
Department  were  dealing  with  the  issue,  nobody  had  really 
told  me  it  had  been  done.   I  said,  this  is  a  very  important 
thing.^^^^^^^Hl  said,  I  don't  want  somebody  to  get  in 
trouble  later  on  it.   And  he  assured  me  it  was  being  taken 
care  of. 

Q    And  did  you  communicate  that  back  to  Gen.  Russo? 

A    Sir,  as  I  recall,  I  did.   I'm  sure  I  did. 

Q    Before  we  go  to  the  second  shipment  and  any 
particulars  on  it,  let  me  ask  you  about  one  or  two  things 
you  told  us  in  April. 

You  mentioned  earlier  your  boss  and  predecessor, 
Lt.  Col.  Jeffrey  Stevens,  who  I  think  retired  on  June  30, 

25    1985.   You  said  that  he 






























Q    Also  for  the  record,  do  you  have  )cnowledge  of  any 
efforts  by  the  Department  of  the  Army  to  divert  funds  or 
weapons  or  ammunition  from  shipment  to  any  other  country  to 
divert  that  to  the  contras  in  the  time  you  were  at  DSLOG? 
[Pause. ] 

A    There  were  never  any  efforts  by  me,  that  I  know 
about  where  I  was  actively  involved  in  diverting  anything  to 
go  to  the  contras — "diverting."   I  want  to  be  cautious  on 
that  word. 

Q    Were  there  efforts  by  others  of  whom  you  had 

A    No,  sir.   And  I  don't  want  to  open  a  can  of  worms. 

Q    And  did  any  of  those  take  place  after  October  of 
1984  during  which  time  the  Boland  Amendment  would  have  been 
in  effect  cutting  off  all  U.S.  Government  funds  in  any 
naiB*r  for  the  aid  and  support  of  the  contras? 

%.  k         It  is  possible  that  that  happened.   Once  again, 
though,  because  of  our  large  Armed  Forces  down  there  in 

23  Central  America,  you  know,  for  me  to  ship  something  toi 

24  ^^^^^^^^^^^^^^^^^^^^^^^^^^^Hi-n 

25  not,  could  not,  and  did  not  have  to  be  construed  as  an 








'<!  *  P-'i 




























MR.  KREUZER:   What's  the  long  title  of  "MTMC"? 

THE  WITNESS:   Military  Traffic  Management  Command. 
It's  the  Army  major  command  that  is  responsible  for  shipping 
things  entering  into  the  Defense  Transportation  System, 
which  is  a  combination  of  planes,  ships,  et  cetera,  that 
covers  the  world-wide  sphere. 

MR.  KREUZER:   And  MTMC  would  provide  the — 

THE  WITNESS:   Well,  MTMC  might  provide  it.   MTMC 
again  is  just  the  Army  leg  of  a  defense  system,  meaning  that 
you've  got  MAC  aircraft  and  Navy  vessels  all  part  of  it.   So 
in  terms  of  things  I  might  have  been  involved  in  shipping 
south  for  the  Agency,  they  were  common,  going  to  known  U.S. 
addresses  through  the  Defense  Transportation  System. 
V.      BY  MR.  SAXON:   (Resuming) 

•*  Q    For  the  record.  Major,  is  it  safe  to  say  that  you 
had  no  knowledge  after  October  of  1984  that  anything  you 
were  involved  wii 





























I  would  say  again  for  the  record  that  I  was  never 
in  three  years  there  ever  asked  by  the  leadership  of  the 
Army  or  the  Defense  Department  ever  to  do  anything  illegal; 

MR.  KREUZER:   Can  you  describe  to  me  the  terminal 
point  at  Tegucigalpa  which  received  materiel  via  the  MTMC? 

THE  WITNESS:   Roger,  just  picture  a  large  port,  if 
you  would,  to  look  at  Bayonne,  New  Jersey,  where  you've  got 
ships  coming  and  going.   You've  got  trucks  hauling  cargo 
off.   You've  got  authorized  people  coming  to  sign  for 

Typically,  if  we  ship  something  down  there,  it  was 
care  of  the  U.S.  Embassy.   That  was  a  typical  address  to 
ship  things  care  of.   Also,  some  of  the  shipments  went  care 
of  U.S.  MILGROUP. 

MR.  KREUZER:   Do  we  have  a  command  there  at  the 



LS  (1\\I»*II.9I 



1  port? 

2  THE  WITNESS:   You've  got  a  representative  down 

3  there.   MTMC  is  represented  down  there  by  an  office.   Again, 

4  I  don't  know  the  details  of  how  it's  constructed,  but 

5  Military  Traffic  Management  Command  has  an  office  for 

6  southern  command  down  there.   Exactly  how  it  is  staffed  and 

7  operated,  I  don't  know. 

8  MR.  KREUZER:   And  that  is  located  in  a  port? 

9  THE  WITNESS:   I  don't  know  where  the  office  is  in 

10  terms  of  where  the  office  is  in  Central  America.   I  know  I 

11  used  to  have  an  AUDAVON  number  to  call  the  Colonel  if  I  had 

12  any  problems  with  the  Port.   Also,  he  would  call  me  if  he 

13  was  having  problems.   But  in  terms  of  for  me  to  say  today,  I 

14  don't  know  precisely  where  the  office  is. 

15  MR.  KREUZER:   What  are  the  names  of  some  of  the 

16  people  down  there  with  whom  you  would  speak  from  time  to 

17  time? 

18  THE  WITNESS:   I  would  have  to  go  back  and  look  at 

19  my  notes.   In  my  notes,  there  is  a  record  of  the  Colonel. 

20  ^11^^^  °"^  single  point  of  contact  I  dealt  with  exclusively, 

22  MR.  KREUZER:   But  you  don't  remember  his  name? 

23  THE  WITNESS:   No.   I  know  he  was  a  full  Colonel, 

24  and  he  was  the  MTMC  Southern  Area  Commander  for  Southern 

25  Command  in  the  '84-85  time  frame.   That  should  be  easy  for 





1  somebody  to  track  down. 

2  MR.  SAXON:   Let's  go  off  the  record  a  second. 

3  [Discussion  off  the  record.] 

4  BY  MR.  SAXON:   (Resuming) 

5  Q    Major,  if  we  can  now,  let's  focus  on  the  second 

6  TOW  shipment.   I  believe  that  on  February  17  you  got  a  call 

7  f rom^^^^^^^^H  who  said  to  be  ready  for  the  second 

8  shipment  within  the  next  couple  weeks.   Is  that  correct? 

9  A    Yes,  sir,  it  is  correct. 

10  Q    And  did  you  then  call  Col.  Lincoln? 

11  A    Yes,  sir,  I  did.   This  was  a  smaller  shipment  this 

12  time.   Dave  only  wanted  about  500  missiles  this  tine. 

13  Q    Was  it  "about  500,"  or  was  it  508? 

14  A    It  could  have  been.   I  think  it  was  508. 

15  Q    And  when  you  called  Col.  Lincoln,  did  you  tell  him 

16  you  needed  another  shipment  of  widgets  for  Project  Snowball? 

17  A    That's  precisely  the  words  I  used  with  Col. 

18  Lincoln,  sir.  Col.  Lincoln's  main  concern  at  this  time  was, 

19  keeping  in  mind  we  already  have  all  this  history  behind  us 

20  ofaill  this  trial  and  tribulation  on  pricing  and 

21  adidEltlcations  on  widgets,  and  he  says:   Chris,  he  says,  my 

22  main  concern  is  this  guard  force,  he  said.   Are  we  going  to 

23  be  able  to  lift  off?  He  said,  I  would  rather  you  get  do*m 

24  to  the  point  where  you  know  you're  going  to  take  delivery  on 

25  them  within  48  hours  and,  he  said,  I'll  bring  them  up  here 





1  just  before  the  delivery. 

2  Q    Had  he  concluded  that  he  could  get  the  TOWs  to 

3  Redstone  in  three  days? 

4  A    Yes,  sir,  he  did. 

5  Q    So  he  was  going  to  wait,  really,  until  three  days 

6  prior  to  the  delivery  date? 

7  A    Yes.   It  turned  out,  though,  that  we  had  them  up 
3  to  a  little  bit  longer  than  that.   He  was  concerned  about 
9  glitches,  and  he  got  them  up  there  a  little  bit  earlier. 

10  But  the  second  shipment  was  set  up  precisely  as  the  last, 

11  except  with  one  difference. 

^mm^m^^^^^did        me  to  try  to  get  MAC 

13  aircraft.   He  decided  that  the  cost  for  the  ground 

14  transportation  was  so  cheap  compared  to  the  use  of  a  MAC 

15  flight,  that  he  said  economically  it  made  lots  of  sense,  as 

16  long  as  we  had  the  two-day  notice,  for  follow-on 

17  transportation. 

18  ^^^^  So  he  built  the  driving  time  from  Redstone  ^o^^H 

19  ^^^^^^^into  his  factoring  when  he  started  negotiating  for 

20  fe^ow-on  transportation^^^^^^^^^Hfor  the  second 

21  shl^nt. 

22  MR.  SAXON:   Let's  go  off  a  second. 

23  [Discussion  off  the  record.] 

24  BY  MR.  SAXON:   (Resuming) 

2  5  Q    To  go  back  to  the  number  of  508  missiles,  did  you 





why  there  was  such  an  uneven,  or 

1  ever  inquire 

2  curious  number? 

3  A    Yes,  sir,  I  did. 

4  Q    And  what  did  he  tell  you? 

5  A    The  answer  was  that  they  were  working  from  a  fixed 

6  sum  of  money,  and  that  was  how  the  numbers  had  worked  out. 

Q  ^^^^^^^^^^H  told  you,  then,  at  some  point  to 

8  Baggett  Trucking  again  for  this  shipment.   Is  that  right? 

9  A    Yes,  sir,  he  did.   As  a  matter  of  fact,  that  was 

10  early  on  in  the  second  equation. 

11  Q    And  did  everything  go  down  on  the  second  shipment 

12  more  or  less  as  the  first,  except  for  the  fact  that  there 

13  was  no  Agency  representative  present? 

14  A    There  were  two  other  factors.   The  second  shipment 

15  was  identical  to  the  first,  with  these  major  differences. 

16  One  is  that  we  were  delayed  nearly  six  weeks  before  we 

17  executed  the  second  phase.   It  was  into  early  May,  as  I 

18  recall,  around  the  13th  of  May.   It  may  have  been  a  little 

19  bit  later,  but  early  in  May. 

20  The  stress! 
^^^^^^^^^^^^^^f  was  that  one  day  at  a  time    were  being 

22  moved  forward — tomorrow  we're  going  to  do  it;  tomorrow  we're 

23  going  to  do  it.   We'd  fall  through.   Tomorrow  we're  really 

24  going  to  do  it.   That  had  been  a  lot  of  stress  on  us  as  we 

2  5  moved  forward  the  six  weeks  from  late  February  to  early  May. 





1  But  in  terms  of  the  execution  of  it,  the  execution 

2  of  the  second  phase  went  very  smoothly  indeed.   I  by  now  had 

3  orders  to  leave  DSLOG  and  go  to  Denver.   I  had  set  it  all 

4  up ,  though .   I  had  made  the  same  arrangements  with^^^^^^^H 

5  ^^^^fthat  I  had  previously.   Colonel  Armbright  out  of  my 

6  office  went  down  to  watch  the  loadup  and  see  the  execution 

7  of  it,  and  there  is  a  lot  of  paperwork  to  handle  when  you're 

8  acting  as  the  consignor  for  tons  of  explosive  shipments. 

9  Q    This  was  Col.  Larry  Armbright? 

10  A    Col.  Larry  Armbright. 

11  Q    What  was  his  position? 

12  A    He  was  called  the  Logistics  Accounts  Coordinator 

13  in  DSLOG. 

14  Q    And  once  you  left,  did  Col.  Armbright  more  or  less 

15  take  over  and  do  the  things  that  you'd  been  doing  on 

16  Snowball? 

17  A    He  did  on  the  third  shipment  on  Snowball,  sir. 

18  Crocus  was  essentially  finished,  except  for  a  very  few  small 

19  hang-on  details  when  1  left.   But  Col.  Armbright  fully 

20  ajd^rutcd  the  third  phase  of  Snowball  after  my  departure,  and 

21  h« *«x«cuted  the  on-ground  phase  of  the  second  part. 

22  Q    And  he  went  down,  I  think  you  told  us  before,  on 

23  May  19th  to  Redstone? 

24  A    That  is  the  correct  date,  sir.   I  had  said  earlier 

25  the  13th,  but  I  meant  the  19th. 








Q    And  was  there  any  reason  why  an  Agency 
representative  did  not  go  that  time? 

A    They  begged  off;  plus,  we  already  had  their  funds' 
certification  up  front,  and  they  had  agreed  to  sign  a 
document  as  soon  as  Col.  Armbright  got  back.   The  DSLOG 
leadership  had  no  problem  with  that,  since  everything  had 
worked  smoothly  the  first  time. 

Q    On  the  first  shipment  when  the  Agency 
representative  went  down,  what  kind  of  credentials  did  he 

A    Sir,! 

Q    So  if  we  talked  to  anyone  in  the  course  of  this 
investigation  at  Redstone  and  they  saidl 

Q    Now  did  you  get  a  call  from  Col.  Armbright  on  the 






























morning  of  May  20th  telling  you  that  everything  had  gone 

A    Yes,  sir,  I  did. 

Q    And  that  meant  that  the  missiles  had  departed  by 
truck  to — 

A    With  no  incident,  yes,  sir. 

Q    — towarc 

Now  did  this  end  your  involvement  with  the  TOWs, 
except  for  the  billing? 

A    Yes,  sir,  it  did. 

Q    And  more  or  less  at  this  point.  Col.  Armbright 
took  over  and  handled  the  third  shipment  of  TOWs. 

A    Yes,  sir,  that's  correct. 

Q    The  charges  from  MICOM  that  had  to  be  paid  back 
before  you  left  came  to  approximately  what  amount? 

A    Sir,  as  I  recall,  about  $5.5  million. 

Q    Would  $5.6  million  sound  about  right? 

A    Yes,  sir,  it  does. 
































Q    Now  do  you  have  any  )uiowledge  of  what  actually 
transpired  with  I  guess  the  first  and  second  shipment  of 
TOWS,  and  any  shipment  and  payment  for  the  HAWK  repair  parts 
before  you  left  in  terms  of  getting  monies  from  the  Agency 
to  the  proper  command? 

A    Sir,  the  HAWK  parts  were  not  paid  for  when  I  left. 
They  had  been  shipped  and  received  successfully. 

Q    So  let's  confine  your  answer  then  to  the  TOWs,  the 
first  and  second  shipment. 

A    I  did  receive  payment  for  the  first  and  second 
shipment  of  HAWKs  from  the  Agency.   What  happened  was,  as  I 
got  closer  to  departing,  I  kept  calling  Chris  Leachman.   He 
finally  got  me  a  bill  together  for  this  roughly  $5.6 
million,  which  covered  again  the  costs  of  the  missiles  and 
the  ancillary  costs  MICOM  billed  us  for. 

I  hand-carried  that  bill  over  to^^^^ 

and  he 

said,  I  will  have  checks  for  you  within  just  a  few  days,  and 
h«9ttd.   And  he  asked  me  to  come  over  and  get  those  from 
hflR^  I 



































Now  to  your  knowledge,  did  MICOH  ever  receive 
their  $5.6  Billion? 

A    As  a  matter  of  fact,  they  got  it  very  cpiiclcly; 
because  from  the  day  that  our  classified  courier  hand- 
carried  the  checks  over — this  was  all  within  a  couple  of 
weeks  of  me  getting  the  bill  until  we  had  the  payment  back 
from  the  Agency — within  30  days  of  Chris  Leachman  presenting 
us  his  bill,  we  had  the  checks  on  their  way  to  MICOM.   I 
know  they  were  received,  because  before  1  left  DSLOG  in  late 
June  of  '86,  and  they  were  billed  in  late  May,  they  bad  , 
their  money  down  at  MICOM,! 

Q    And  when  you  left  in  late  June,  that  would  be  the 
extent  of  your  knowledge? 

A    That  was  the  extent  of  the  monies  that  had  been 
paid  to  us,  and  I  did  know  it,  because  until  I  left  I 
exclusively  handled  the  billing  and  the  payments. 

Q    But  whether  those  checks  were  properly  deposited, 
th«y  were  properly — 

Don't  know.   But  I  know  that  they  have 
lily  arrived  down  there  prior  to  my  departure. 
MR.  SAXON:   Okay.   I'm  ready  to  go  to  the  HAWK 
repair  parts. 

Roger,  do  you  have  anything  on  TOWs? 
MR.  KREUZER:   No. 

it  i1^t,nvUi5 






























BY  MR.  SAXON:   (Resuming) 

Q    On  the  HAWK  repair  parts,  as  I  understand  it  in 
early  March  of  1986  Gen.  Russo  called  you  up  to  his  office 
and  introduced  you  ^°^^^^^^^^^m  ^^   ^^^^  correct? 

A    Yes,  sir,  that  is  correct. 

Q    And  how  did  he  make  that  introduction  to  you? 

A    He  said,  Chris,  this  isj 

So  he  said,  "This 
Now  he  is  in  his  office,  the  ADSLOG's  office. 
"Chris,"  he  said,  "We're  going  to  follow  the  same  rules  on 
this  project  that  we  did  on  Snowball."  He  said,! 

though,  this  time  has  a  list  for  us  of  a  whole  bunch 
of  things  that  we  need  your  help  with." 

Jl    And  he  physically  had  in  hand  the  list  of  what? 

Which  he  handed  to  me,  a  list  of  14  Xeroxed  pages 
b««Ji  field-typed  by  somebody — when  I  say  "field 
typed,"  because  the  typing  was  a  little  erratic,  a  lot  of 
misspellings,  and  skipped  spaces;  it  was  not  a  professional 
piece  of  work.   But  there  was  no  agency  stationery  listed. 
It  was  plain  bond  paper  with  typing  on  it  of  stock  numbers, 





1  n^lKlatures,  quantities,  and  prices. 

2  '  Q    Do  you  recall  how  many  line  items  of  repair  parts 

3  there  were  for  the  HAWK  missile? 

4  A    I  want  to  say,  sir,  there  were  about  248.   I  know 

5  that  at  the  end  the  numbers  varied  between  235  and  2  50  as  we 

6  massaged  the  list.   And  again.  Gen.  Russo  explained  the 

7  rules.   No  paperwork.   The  recjuest  is  going  to  come  over. 

8  No  written  staffing  memo.   And  the  urgent  requirement  on 

9  this  one,  which  was  almost  impossible,  was  that  we  give 

10  ^^^^^Hback  an  answer  within  two  days:   Could  ve  support  all 

11  those  things  on  that  list? 

12  Q    So  you  were  asked  to  ascertain  within  48  hours 

13  whether  the  Army  had  and  could  supply  these  234  items? 

14  A    Yes,  sir.   A  brief  transcription  of  what  followed 

15  that  same  day.   This  is  probably  early  afternoon.   I  went 

16  down  to  my  office  and  by  4:00  o'clock  that  day  Col. 

17  Armbright  and  I  had  figured  out  that  at  least  eUsout  14 

18  different  Army  and  DIA  Commands  were  involved,  and  we  said 

19  it,.)q^„*'3*olutely  Impossible  to  deal  with  so  many  different 

•  "  ■■<■ 

20  ii^H^in  such  a  short  time. 

21  '^^^B^   ^^  that  point,  I  made  the  decision  to  go  to  the 

22  major' command  level.   Again,  even  though  Gen.  Russo's 

23  guidance  was  "minimum  number  of  people,"  I  just  decided  that 

24  the  time  frame  was  so  compressed — and  I  went  up  to  tell  Gen. 
2  5  Russo  I  was  doiilGLilaaJti,  I  told  him  that  I  had  gone  to  a 




























trusted  point  of  contact  at  DLA, 

Q    DLA  is  the  Defense  Logistics  Agency? 

A    Defense  Logistics  Agency.   They're  headquartered 

at  Cameron  Station,  Virginia. 

And  you  went  also  to  AMC? 
To  a  gentleman,! 
And  AMC? 

And  that  stands  for  Army  Materiel  Command? 
Yes,  sir.   It's  the  Army  Materiel  Command.   These 
are  the  two  principal  commands  in  the  Amy,  in  the  defense 
agency,  for  managing  materiel  at  the  major  level. 

Q    Okay.   Before  we  get  into  those  discussions  with 
the  individuals  at  DLA  and  AMC,  let  me  back  up.   When  you 
were  meeting  with  Gen.  Russo  anc^^^^^^^^^H  did| 
tell  you  who  your  point  of  contact  would  be  at  the  Agency? 
A    Yes,  sir,  he  did. 
Q    Would  that  also  have  beer 
h         Yes,  sir,  it  was. 

Did  you  say  anything  to^^^^^^^^labout  the  use 
airlift  on  the  HAWKs  and  whether  anything  needed  to 
be  done  differently? 

A    Yes,  sir,  I  did.   As  a  matter  of  fact,  once  he  had 
identified  to  me  that^^^^^^^^H was  the  action  officer,  I 
immediately  the*|«jr#M:eA  ttnii'MrtlAnL"*'  the  tarnished 







relationship  that  the  Army  had  created  out  of  my  office  with 
MAC,  and  said  that  I  wasn't  anxious  to  damage  these  points 
of  contact  again,  and  that  in  fact  MICOM — or  that  MAC 
legitimately  had  complained  about  the  way  we  had  processed 

said,^^^^^^^^^^^^^Btold  me  was 

the  issue.   I  said,  can  we  do  better  this  time?   I  said, 
because  if  we're  going  to  need  MAC — and  again  that  was  the 
scenario,  that^^^^^^^^f  f elt  we  would  be  using  MAC  at  some 
point  in  the  process,  I  said,  we  had  to  do  a  lot  better.   I 
said,  we  could  not  afford  to  continue  to  damage  the 
relationship  by  faulty  planning.   And  they  said  they  would 
do  better.   That  is  more  or  less  how  we  left  that  that  day. 

Q    All  right.   When  you  contacted  the  folks  at  DLA, 
you      you       with^^^^^^^^^^^^^^^^^^^^^^^^^H  Is 
that  correct? 

A    Yes,  sir,  that  is  correct. 

Q    And  did  you  contact  an  operation  there  at  OLA 

A    Sir,  that's  not  quite  the  right  word.   It's  called 

Q    And  then  at  AMC,  the  Army  Materiel  Command,  you 
contacted|d|i:|.)niiiari^^^'th£._name  of  J 








AMC.   That's  such  a  giant 
headquarters,  I  thought  I'd  narrow  you  down  to  where  he  is 
out  of  the  thousands  of  people  there. 

Q    But  ultimately,  I  believe  you  dealt  on  a  day-to- 
day basis  with  two  other  individuals  at  AMC.   Is  that 

A    One  other  individual  at  AMC  headquarters,  sir,  and 
two  other  individuals  at  MICOM.   The  other  individual  that 

11   picked  up  the  mission  fromi 

Q    And  were  the  other  two  individuals  John  Chapman 
and  Bill  Reyer,  R-e-y-e-r? 

A    Yes,  sir,  they  were,  at  MICOM  in  the  HAWK  Project 
Manager's  Office  at  MICOM. 

Q    At  Redstone  Arsenal. 

A    Yes,  sir,  at  Redstone  Arsenal. 

Q    And  did  you  give  these  individuals  the  list  and 

24  tell  them  to  start  working  the  requirement? 

25  A    Yes,  svi-.  .Qli^  ^  i^A '^£fy  short  time  constrain/^. 





1  I  wasn't  able  to  have  nearly  the  tight  control  over 

2  paperwork  I  had  on  the  previous  mission.   I  gave  Xeroxed 

3  copies  of  the  lists  to  both  DLA  Headquarters  and  to  AMC 

4  Headquarters,  and  what  AMC  did  that  same  day  that  I  had  got 

5  the  list  is  they  Data-FAX'd  a  copy  of  it  down  to  MICOM 

6  Headquarters.    A  Data-FAX,  for  the  record,  is  a  telephone 

7  transcribing  system  that  gives  you  an  almost  exact  copy  out 

8  of  the  telephone  wires  about  15  minutes  later. 

9  Q    And  I  believe  you  physically  went  to  AMC  and  Col. 

10  Armbright  physically  went  to  DLA? 

11  A    yes,  sir.   We  split  the  mission  up  again. 

12  Q    And  what  instructions  did  you  give  to  any  of  the 

13  people  with  whom  you  dealt  in  terms  of  how  this  was  to  be 

14  done,  records,  number  of  people  involved,  et  cetera? 

15  A    Well,  I  couldn't  give  the  same  instructions  to  AMC 

16  that  have  been  given  to  me.   I  tolc^^^^^^^^^^Hthat  we 

17  wanted  to  limit  the  number  of  people  to  the  absolute  minimum 

18  number  possible.   I  said,  let's  consider  this  matter 

19  classified  at  the  Top  Secret  level,  I  said,  but  we  have  to 
2  0  handle  some  of  it  as  a  white  world  mission.   And  that  was 

21  how  we  decided  to  hand  it. 

22  Again,  those  operational  decisions  day  to  day  were 

23  mine.   It  was  easiest  to  protect  the  materiel  by  pretending 

24  that  this  was  a  regular,  normal  white  world  operation;  that 

25  there  was  a  li|^  pJ^J-tems^thatAMC  needs,  not  tying  it  to 





1  DSLOG  right  away,  just  get  down  there.   We  need  inunediate 

2  capability  to  assess  this  list  of  items.   That's  how  it  was 

3  done,  as  a  white  world  type  action.   Although^^^^^^^^^^^^f 

4  understood  that  the  entire  operation  was  a  highly  classified 

5  operation. 

6  Q    I  believe  you  told  us  in  April  that  within  48 

7  hours  Chapman  and  Reyer  had  identified  all  but  20  items  on 

8  the  AMDF.   Is  that  correct? 

9  A    Yes,  sir,  that  is  correct. 

10  Q    And  did  Simpson — excuse  me,  did  you  then  call 

11  ^^^^^^^^^^H within  2  4  hours  saying  that  you  could  meet  the 

12  requirements  but  you  would  have  to  revise  some  of  the  stock 

13  figures? 

14  A    Not  only  some  of  the  stocJc  figures,  sir,  but  some 

15  of  the  prices  as  well.   It  would  appear  that  some  of  the 

16  prices  that  the  fellows  had  were  years  old,  and  there  were 

17  some  very  material  changes  in  the  prices  on  several  of  the 

18  items.  ___^_______ 

19  Q    Did  you  ever  ask^^^^^^^^H  where  he  got  his 

20  list? 

21  A    Yes,  sir.   That  became  of  material  interest 

22  because  Mr.  John  Chapman,  the  technician,  technical  engineer 

23  we  will  call  him,  at  MICOM  was  very  concerned  about  it.   He 

24  said,  based  on  the  list  that  had  been  provided,  he  said,  he 

25  kept  detailed  ,i;fip5rds  on  all  sales  of  HAWK  missile  systems 

igMcords  on  all  sales  or 



1  to  all  U.S.  customers  worldwide.   He  said,  based  on  such  an 

2  extensive  list,  he  thought  that  other  parts,  too  might  be 

3  near  the  end  of  their  useful  life.   He  said  if  I  could  give 

4  him  the  serial  numbers  of  the  systems,  he  could  look  them  up 

5  on  his  records  and  provide  us  even  better  support. 

6  He  was  concerned  when  I  would  not  give  him  that 

7  data.   Obviously  I  went  back  to^^^^^^^^^Hasking  for  it, 

8  and  he  simply  would  not  give  it  to  me. 

9  One  other  issue,  too.   Unlike  the  first  project 
where  they  did  yield  to  prices,  ^^^^^^^^^^^^H  on  the 

11  second  project  that  money  was  an  absolute  tight  constraint. 

12  There  was  a  fixed  amount  of  money  for  the  project.   And  as 

13  the  prices  had  gone  up  on  some  items,  some  of  the  investing 

14  that^^^^^^^^^^Hand  I  did  on  widgets,  there's  239 

15  different  lines  items,  had  to  do  with  some  items  cost  more 

16  than  he  had  originally  intended.   And  some  of  them  got  cut 

17  down. 

18  That  happened.   There  were  other  items  that  were 

19  cheaper.   All  of  that  entered  into  the  equation. 

20  Q    Now  is  it  correct  that  with  the  people  you  were 

21  working  with,  ultimately  all  but  seven  items  were 

22  identified?   Does  that  sound  right? 

23  A    Sir,  that  does  sound  correct,  to  the  best  of  my 

24  recollection.   Some  of  the  items  have  simply  been  typed  in 
2  5  there.   I  had  some  generic  nomenclature  on  the  list  that 





1  ^^^^^H  had  given  me.   Between  the  nomenclature  and  various 

2  parts  of  the  stock  number,  Mr.  John  Chapman,  through 

3  excrutiatingly  detailed  detective  work  was  able  to  put 

4  together  the  right  part  by  process  of  elimination. 

5  Q    Did  Chapman  and  Reyer  ever  ask  you  if  a  customer 

6  was  actually  going  to  use  this  stuff? 

7  A    Yes,  sir,  they  did. 

8  Q    And  what  did  you  tell  them? 

9  A    As  a  matter  of  fact,  I  believe  that  I  told  them 

10  that  we  were  going  to  use  this,  and  use  it  right  away,  and 

11  that  it  had  to  work.   It  had  to  be  in  condition  Code  Ac. 

12  That  was  the  issue. 

13  Q    Let  me  ask  you  about  propositioning  at  one 

14  location.   You  indicated  these  items  in  the  inventory  were 

15  scattered  around  at  different  depots.   Is  that  correct? 

16  A    Yes,  sir,  that  is  correct. 

17  Q    What  was  the  prepositioning  issue? 

18  A    There  were  two  issues.   First  of  all,  the  real 

19  reason  for  the  propositioning  was  that  I  felt,  having  talked 
2  0  ^°^^^^^^^^^B  that  he  was  only  going  to  get  two  days' 

21  notice  again,  like  we  had  on  the  phases  of  Snowball. 

2  2  Having  had  two  three  years  of  experience  at  this 

23  business,  I  realize  that  with — I  think  we  had  nearly  27 

24  different  locations  involved,  and  that  was  27  different 

25  locations  belonging  to  I  believe  9  different  major  commands 



























of  the  Army  and  the  Defense  Department. 

Q    Was  there  that  one  Air  Force  Command  involved? 

A    Yes,  as  well.   In  addition,   and  I  felt  that  that 
was  certainly  going  to  test  Murphy's  law  terribly  if  we 
tried  to  get  that  successfully  done  in  48  hours. 

recommended  ^°^^^^^^^^^^^^^^|  that 
preposition.   I  said,  I'm  going  to  need  money  to  do  that. 

Q    And  that  simply  means  to  consolidate  them  all  into 
a  single  location? 

A    Yes.   My  plan  had  been  to  consolidate  them.   I  had 
tried  to  find  out  fron^^^^Bwhere  we  were  going  to  ship 
things  out  of.   He  was  very  close-mouthed,  but  he  finally 
consented  to  the  fact  that,  well,  somewhere  arounc 

The  issue  on  the  propositioning  was  this:   I  want 
to  see^^^mH^^^HHto  ask  him  if  he  would  fund  this 
effort.   Now  keep  in  mind,  I  have  no  letter  yet  certifying 

2  5    funds. 





1  Q    Was  that  the  reason  you  did  that,  because  DLA 

2  insisted  that  they  would  not  preposition  unless  they  had 

3  funds? 

4  A    Well,  yes.   But  the  Army  wouldn't,  either. 

5  Neither  of  the  two  agencies  would.   The  Amy  AMC 

6  headquarters  wanted  a  certification  from  me  that  I  would  pay 

7  this  bill,  and  I  had  told  John  Chapman  and  Bill  Reyder  that 

8  based  on  other  dealings  I  had  had  with  the  people  I  was 

9  dealing  with,  that  we  could  get  delayed  on  this  weeks  at  a 

10  time. 

11  Well,  once  the  costs  are  incurred,  somebody  wants 
to  bill  .^^^^^^^^^^^^^Hagain  a  gentleman        word, 

13  promised  me  that  even  if  the  mission  aborted  he  would 

14  provide  me  our  expenses  covered  for  the  Army  activities.   He 

15  said,  I'm  not  going  to  pay  you  for  the  daily  activities. 

16  And,  he  said,  since  they  won't  do  it  without  a  specific  fund 

17  site — AMC  was  willing  to  do  the  work  without  a  specific  fund 

18  site  as  long  as  I  certified  the  ability  to  pay  the  bill. 

19  Again,  because  I  was  dealing  with  long-time 

20  contacts,  they  trusted  me.   DLA  would  not  do  it  without  a 
fund       but^^^^^^^^^^^^Hdid  agree  to  do      he 

22  could.   What  he  could  do  was  that  each  of  the  DLA  depots  he 

23  had  the  items  at  that  depot  segregated  on  a  pallet  and 
2  4  marked  for  my  special  project. 

25        Q    So  the  repair  parts  were  prepositioned  in 



2  A    For  all  of  the  Army  spare  parts  which,  I  might 

3  mention,  was  a  large  chunk  of  the  materiel.   The  DLA  part 

4  was  a  smaller  portion  both  in  dollars  and  volume. 

5  Q    So  they  were  not  propositioned,  but  they  were 

6  separated  out — 

7  A    And  in  fact,  sealed  up  in  plastic  and  everything 

8  else.   They  were  basically  ready  to  ship.   That  was  a  lot  of 

9  work. 

10  Q    And  when  the  parts  were  prepositioned,  were  there 

11  some  items  that  had  not  arrived? 

12  A    Well,  they  the  parts  were  propositioned,  to  start 

13  with  as  we  prepared  to  proposition,  we  found  out  that  items 

14  that  had  been  listed  on  DoD  inventory  records,  keeping  in 

15  mind  that  you're  going  to  look  at  a  record  one  day,  and 

16  records  are  made  as  of  cutoffs,  that  some  of  the  items  that 

17  other  items  had  come  in  or  gone  out  of  the  shelf  since  the 

18  last  inventory  update,  and  we  had  to  change  some  other 

19  quantities  and  figures  based  on  what  we  were  finding  on  the 

20  shelf  as  we  pulled  things. 

21  That  wasn't  the  last  preposition.   That  wasn't  the 

22  last  change,  John. 

2  3  Because  once  we  determined  what  was  on  the  shelf, 

24  I  made  up  a  list  for  Gen.  Russo  of  critical  items.   John 

25  Chapman  and  Bill  Reyder  talked  to  me  at  length  about  Army 





1  capability  to  have  another  item  manufactured,  and  what  was 

2  the  average  demand  time. 

3  So,  for  an  example,  I  might  list  an  item  that  the 

4  Agency  may  have  asked  for  three  of  widget  X.   Widget  X  is 

5  only  used  once  a  year  by  the  Army.   So  we  would  give  two 

6  away  and  keep  one,  because  we  felt  a  year  was  long  enough  to 

7  obtain  some  more  items  for  the  stock. 

8  Q    All  right.   Let  me  ask  you  a  question  or  two  about 

9  readiness,  then.   Did  there  come  a  point  at  which  you  put 

10  together  a  matrix  on  readiness,  with  availability  in  the 

11  inventory,  manufacture  time,  and  so  forth? 

12  A    Yes,  sir,  I  did  that.   And  I  kept  detailed  notes 

13  on  that  in  my  office.   The  list  is  a  working,  worn-out 

14  document  at  this  point,  but  it  is  still  there  for  the 

15  record.   It  shows  how  the  numbers  changed,  and  we  lined 

16  things  through,  and  marked  "not  available." 

17  Other  items  we  substituted,  as  I  recall,  or 

18  provided  higher  assemblies  on  probably  10  percent  of  the 

19  items.   The  Agency  did  pay  us  our  asking  price  for  the 

20  higher  assemblies  as  the  replacement  item. 

21  So  besides  the  seven  that  we  couldn't  find — sir, 

22  it  was  a  very  dynamic  list. 

23  Q    Let  me  ask  you  about  Pre-Phase  II  PIP  configured, 

24  or  product  improvement  program  conficfured  HAHKs  versus  the 

25  issue  of  interchanqeabiJlity^^^)|igycplain  that  a  bit  for 




1  me? 

2  A    Sir,  the  term  Pre-Phase  II  configured  was  a  term 

3  used  by  MICOM  to  describe  generically  all  of  the  parts  that 

4  the  Agency  was  asking  for.   The  Phase  II  Product  Improvement 

5  Program  at  MICOM  took  the  Army  HAWK  missile  system  and  gave 

6  it  modern  electronics,  and  a  much  more  accurate  guidance 

7  system,  radar  guidance  system. 

8  Q    Now  the  HAVnc  system,  for  the  record,  essentially 

9  involves  three  things,  as  I  understand  it:   the  radar,  a 

10  pilot  system,  and  a  computer.   Is  that  correct? 

11  A    Yes,  sir,  that  is  correct.   Plus  the  fourth  part, 

12  the  missile  itself. 

13  Q    Continue,  then,  and  tell  us  about  this 

14  modification. 

15  A    The  modification  is  very  important  in 

16  understanding  this  whole  project.  Project  Crocus,  because 

17  when  the  electronics  were  changed  on  the  HAWK  missile  system 

18  and  the  electronics  were  completely  overhauled,  cables, 

19  sizes,  whole  subassemblies  and  major  assemblies  were  pulled 

20  out  and  replaced  by  whole  different  items. 

21  The  end  result  was  that  after  the  Phase  II  Product 

22  Improvement  Program  was  done,  and  you  have  a  system  now 

23  called  Post-Phase  II  configured,  you  could  no  longer  take 

24  hundreds  of  your  repair  parts  that  fit  in  the  old  system  and 

25  put  them  in  the  new  system. 




1  Q    Now  this  was  not  true  of  all  parts,  but  it  was 

2  with  some? 

3  A    A  majority  of  them.   A  majority  of  the  parts  now 

4  were  new  state-of-the-art  products,  and  the  new  ones  also 

5  would  not  fit  in  the  old  ones.   It  was  because  the 

6  electronic  configurations  themselves  were  changed. 

7  When  the  subject  came  up  of  asking  for  Pre-Phase 

8  II  PIP  configured  items,  MICOM  offered  to  retrofit.   That 

9  is,  for  the  layman,  bring  all  of  the  old  systems  back  to 

10  their  depot  at  Letterkenny,  overhaul  them,  and  for  the  sum, 

11  as  I  recall  of  about  $600,000  a  system  completely  overhaul 

12  and  bring  up  to  state  of  the  art,  and  plus  they  offered  at 

13  the  same  time  to  go  over  the  entire  system  and  check  the 

14  useful  life  of  all  the  parts  to  make  sure  that  we  basically 

15  had  a  completely  Class  A  condition  code  system. 

16  Q    And  in  fact  was  it  not  the  requirement  that  we 

17  were  trying  to  do  that  for  all  of  our  allies  who  had  the 

18  HAWK  system? 

19  A    Yes,  for  two  reasons.   One  is  to  bring  all  of  our 

20  folks  to  state  of  the  art.   Two  is  to  reduce  the  terrible 

21  expense  of  inventory  that  was  being  caused  to  be  maintained 

22  in  two  separate  inventories  for  two  different  systems.   Plus 
2  3  the  newer  one  obviously  gave  the  owner  a  capability  to  have 
24  a  better  defense. 

2  5        Q    Did  you  ever  go  to^^^^^^^^^H  with  this  proposal 





1  that  the  entire  system  be  reworked? 

2  A    Oh,  yes,  sir.   As  a  matter  of  fact,  we  studied 

3  that  carefully  enough  that  we  even  offered  him  a  specific 

4  time  that  it  would  take.   He  came  back  and  absolutely 

5  rigidly  declined  that. 

6  Q    Now  if  I  understand  what  you're  saying,  the 

7  proposal  from  the  people,  Mr.  Chapman,  Mr.  Reyer,  others 

8  with  whom  you  spoke,  was  that  for  not  a  whole  lot  more  money 

9  the  entire  system  could  be  rebuilt,  rather  than  simply 

10  tinkering  with  it  with  some  of  the  old  parts  that  were 

11  provided  by  the  Agency? 

12  A    Yes,  sir.   And  Mr.  Reyer  had  another  concern  that 

13  fit  in  with  this.   He  felt,  based  on  the  list  provided,  that 

14  whoever  had  put  it  together  didn't  know  precisely  what  they 

15  were  doing,  because  he  felt  too  many  of  some  parts  had  been 

16  requested,  but  not  enough  others.   Some  of  the  parts  that 

17  had  been  requested  he  said  would  have  indicated  that  another 

18  part  had  failed,  but  he  said  they  didn't  ask  for  that  part. 

19  And  he  was  concerned  that  we  weren't  going  to  get  a  good  job 

20  done  based  on  the  list  that  was  provided. 

21  Q    Did  he  tell  you  that  whoever  put  the  list  together 

22  lacked  technical  capability? 

23  A    Yes,  sir,  he  did.   Mr.  Chapman,  who  is  an 

24  engineer,  told  me  that. 

25  Q    And  what  did^^^^^^^^H  tell  you  when  you  went  to 

lat  did^^^^^^^B 





1  him  with  this  proposal? 

2  A    Well,  to  start  with,  John,  at  the  time  that  I  went 

3  ^°^^^^^^^|B  ^^  ^^^  list,  and  this  was  after  Mr.  Chapman 

4  had  told  me  that  he  felt  it  wasn't  technically  proficient, 

5  we  asked  him  to  go  back  and  have  it  reviewed  at  the  source 

6  of  origin,  and  asked  him  if  we — we  even  offered  to  provide  a 

7  technician  to  go  to  the  site  to  look  at  it,  and  that  also 

8  was  declined. 

9  John  Chapman  felt  that  one  of  their  expert 

10  technicians  would  do  a  better  job  than  whoever  had  put  the 

11  list  together.  ^^^^^^^^^H declined  that,  and  told  me  at 

12  that  time  that  he  had  no  capability  to  go  back  to  the  source 

13  of  origin  and  get  the  list  modified. 

14  We  were  still  concerned  at  that  time  about  the 

15  missing  seven  items  that  we  couldn't  identify.   We  didn't 

16  know  whether  they  were  critical,  or  not  a  critical  part  for 

17  the  record.   It  is  a  part  that  you  have  to  have  to  fire  the 

18  system  accurately,  and  you  can  only  be  missing  one  critical 

19  part  and  a  whole  system  won't  work  properly. 

20  So  we  were  very  concerned  about  the  seven  missing 

21  items  that  we  couldn't  identify,  not  knowing  whether  they 

22  were  critical  or  not.   But  we  clearly  established  that  we 

23  had  no  means^^^^^^^^^H^B  to  go  back  to  the        of 

24  origin  and  get  the  list  modified  or  corrected. 

25  Q    And  did  Chapman  actually  ask  you  for  the 





1  destination  so  he  could  then  look  up  the  stock  numbers  of 

2  the  user's  system  and  know  what  parts  would  be  useable? 

3  A    Yes,  sir,  he  did  do  that,  and  that  was  declined. 

4  Q    And  did  you  also  ask^^^^^^^^^l  why  you  couldn't 

5  just  provide  the  customer  with  new  parts? 

6  A    Yes,  sir,  I  did. 

7  Q    And  what  was  the  response  there? 

8  A    The  response  was  that  he  wasn't  interested  in 

9  that.   There  may  have  been  more,  John,  now  but  that  whole — 
10  we  had  that  conversation  as  clear  as  a  bell,  but  all  of  the 

details — as   recall,  to  help^^^^^^^^H|^^V was  telling 

12  me  was  that  they  had  Pre-Phase  II  PIP  configured  radars,  and 

13  that  these  were  to  replace  broken  items  or  damaged  items, 

14  and  he  intended  to  use  them  as  they  were  and  didn't  want  to 

15  wait.   That  was  the  issue,  the  waiting  time. 

16  As  I  recall,  it  was  six  weeks  a  system,  although 

17  they  could  do  several  at  once,  to  modify  the  radar  systems 

18  at  Letterkenny  after  receipt  of  shipment. 

19  Q    Let  me  ask  you  a  question  about  the  pricing  on  the 

20  HAWK  repair  parts.   Did  you  instruct  Chapman  and  Reyer  to 

21  follow  the  standard  price  on  all  parts  with  the  idea  of 
2  2  being  that  neither  the  Army  nor  DLA  lost  money? 

23  A    Yes,  sir,  I  did.   As  a  matter  of  fact,  that  was  my 

24  general  guidance  to  both  MICOM  levels,  and  we  let  them 

25  manage.   The  data  fed  up  through  their  lower  commands  to  the 




























major  headquarters,  and  then  we  went  over  and  picked  up  the 
prices  that  they  provided  to  us. 

Q    And  you  paid  the  prices  the  commands  gave  you, 

A    Yes,  sir.   But  when  we  say  "we  paid,"  we  preferred 
fund  certification  in  a  message  that  I  wrote  myself  in  April 
that  certified  to  the  commands  every  penny,  and  we  provided 
specific  fund  cites. 

I  do  know  that  at  the  time  I  left,  we  had  not  been 
billed.   I  am  further  aware  that  even  when  I  came  back  to 
first  testify  to  the  FBI,  that  we  had  not  yet  got  a  bill 
from  either  of  the  Commodity  Commands  for  the  items  shipped 
on  Project  Crocus. 

Q    On  Crocus,  dic^^^^^^^^^Htell  you  to  wait  until 
everything  was  priced  out  before  he  sought  to  get  the  funds? 

A    Yes,  sir.   I  might  mention  that  in  the  early  days 
of  this  project^^^^^lwas  keeping  up  with  me.   I  was  also 

to  him,^^^^^^^^^^^^^^H  about  the 
environment  every  day  where  some  times  are  not  on  the  shelf, 
some  substitute,  some  hire  assemblies. 

He  said,  I'm  not  even  going  to  go  for  it.   He 
said,  I'm  just  going  to  flat  tell  the  people  I'm  dealing 
with,  ^^^^^^^^1  and  Company,  that  we're  not  ready  to  take 
delivery  on  this  until  you  get  more  concrete  on  where  we 
are.   It  was  kind  of  at  the  point  where  I  had  items 
prepositioned  at  Redstone  Arsenal  ,^^^^^^^^^^H  and  at  the 





1  DLA  Depots,  and  we  had  counted  items  and  priced  them  that 

2  then  we  got  pretty  close  on  the  price. 

3  He  did  bring  to  me  before  we  made  the  shipments 

4  the  funding  authorization  for  all  the  money  that  I  had  asked 

5  him  for,  plus  about  3.5  percent  of  the  gross  total  to  cover 

6  a  statutory  Army  requirement  which  covers  packing,  crating, 

7  and  handling  costs,  which  he  objected  to  paying,  but  he  paid 

8  anyway.   So  he  provided  us  early  on,  and  it  is  no  fault  of 

9  the  Agency  that  the  bill  had  not  been  paid  by  November. 

10  Q    Did  you  ever  have  a  discussion  with  Tom  Taylor  of 

11  the  General  Counsel's  office  regarding  Project  Crocus  and 

12  the  amount  of  money  involved,  and  Congressional 

13  notification? 

14  A    Sir,  I'm  sure  that  we  did. 

15  Q    I  believe  what  you  told  us  in  April  was  that  Tom 

16  Taylor  told  you  that  because  the  amount  involved  was  greater 

17  than  $4  million,  then  the  Congressional  notification  issue 

18  that  had  been  discussed  on  Snowball  would  also  be  operative 

19  with  regard  to  Crocus. 

20  A    Yes,  sir,  that  is  what  I  recall  I  told  you. 

21  Q    And  do  you  remember  talking  to^^^^^^^^^^Blf about 

23        A    Yes,  sir.   The  modus  operandi^^^^^^^^^^His  that 

2  4  Crocus  was  going  to  be  handled^^^^^^^^^^Hthe  same  way 

2  5  Snowball  was. 





1  Q    «nd  do  you  know  if  Gen.  Russo  again  raised  the 

2  issue  with  Gen.  Powell? 

3  A    Sir,  as  I  recall,  he  did  do  that.   Except  that  by 

4  this  time,  or  right  in  the  time  when  I'm  a  little  fuzzy, 

5  Gen.  Powell  was  getting  ready  to  leave  and  Admiral  Jones 

6  took  over,  and  he  may  have  discussed  this  with  Admiral 

7  Jones.   I  know  he  went  up  to  speak  to  the  aid  to  SECDEF. 

8  Q    The  military  assistant? 

9  A    Yes,  sir. 

10  Q    and  the  word  came  back  that  the  Economy  Act 

11  governed  these  transactions,  and  the  customer  would  notify 

12  the  Congress? 

13  A    Yes,  sir,  that  was  true. 

14  Q    The  customer  here,  the  recipient  agency  being  the 

15  CIA? 

16  A    Yes,  sir,  that  is  true.   And  that  did  come  back 

17  from  the  military  assistant  to  the  Secretary. 

18  Q    Let  me  ask  you  what  your  reaction  would  have  been 

19  if  you  had  known  that  the  ultimate  destination  of  the  HAWK 

20  repair  parts  was  Iran? 

21  A    Sir,  as  I  told  you  on  earlier  missions,  because  of 
my      with^^^^^^^^^^^^^^l  and     the  people  we  were 

23  trying  to  arrest  that  were  selling  things  to  Iran,  I  would 

24  have — I  am  convinced  that  if  Tom  Taylor  and  the  General 
2  5  Counsel  had  known  that,  he  was  very,  very  careful  about 






























guarding  the  interests  of  the  Army  and  me. 

and  I  feel  strongly 
that  the  minute  that  he  would  have  )cnown  about  it,  he  would 
have  been  the  first  guy  besides  Gen.  Russo  that  I  would  have 
told.   And  I  feel  that,  had  Tom  Taylor  )cnown  that,  that  the 
course  of  events  would  have  been  different. 

Q    Let's  go  back  to  the  issue  of  readiness  and  ask 
you  whether  there  was  any  depletion  that  would  have  been  the 
result  of  meeting  the  requirement  on  HAWK  repair  parts, 
total  depletion  from  their  inventories? 

A    Yes,  sir.   Some  number  of  items  that  the  Agency 
asked  us  for  were  not  only  in  very  low  balance,  but  they  had 
asked  for  a  very  low  number.   And  again,  when  I  met  with 
Gen.  Russo,  John  Chapman  at  MI COM  had  estimated  they  were 
trying  to  re fit^^^^^^H systems. 

Let's  take  the  example  of ^^^^^^^^^^^^^^H  one 
of  the  items  I  recall  that  they  asked  for.   This  was  an  item 
you  had  to  have  to  fire  the  missile  system  successfully.   So 
then  we  had  to  make  a  decision,  if  we  didn't  give  it  to 
them,  where  are  they  going  to  be  able  to  fire  it?  And 
obviously  there  wasn't  any  point  then  in  giving  them  a  whole 
host  of  items  for  "a"  system,  if  they  wouldn't  give  them  the 





1  one  thing  that  they  had  to  have  to  operate  it. 

2  So  criticality  did  drive  both  what  we  were  willing 

3  to  support  and  what  we  didn't  give  them.   We  did  cut  down 

4  some  critical  items  that  were  necessary  not  to  deplete  the 

5  entire  stock,  but  it  was  a  very  complex  matter.   We  did 

6  reduce  the  stock  we  provided  on  many  items. 

7  On  some,  as  we  discussed  in  April,  after  we 

8  reduced  the  number  we  were  going  to  give  them,  after  an 

9  appeal  on  their  part,  we  raised  some  of  them  back  up 

10  somewhat. 

11  Q    That  was  the  appeal  b^ 

12  A    Yes,  when  he  appealed.   We  didn't  do  that  on  all 

13  of  them.   On  some  of  them  we  were  just  flat  out  that  we 

14  wouldn't  do  that. 

15  Q    And  were  there  some  items  that| 

16  did  not  take  because  th^y  were  more  expensive  than  the 

17  initially  requestc    „em? 

18  A    Yes,  Sii.,  any  number  of  items.   That  was  driven  by 

19  the  fact  that  he  did  identify  to  me,  after  we  had  done  all 

20  his  work  and  we  had  priced  out  the  stuff,  he'd  come  back 

21  with  a  list  for  me  one  day  which  should  also  be  in  my 

22  records,  his  working  list,  where  he  had  chopped  off  the 

23  quantities  I  had  offered  and  provided  a  reduced  quantity. 

I  said|H^^^^^^^^^^^^^^^^^^^^^^^^B  I 




1  telling  me  to  change  again.   I  was  having  visions  of  the 

2  same  sort  of  snarl  in  Snowball.   He  said,  Chris,  it's 

3  simple.   I  have  a  flat  fixed  budget  on  this  and,  he  said,  we 

4  have  to  stay  within  the  total  dollars  that  I  had  when  I 

5  started.   And,  he  said,  I  have  a  few  more  dollars  than  the 

6  total  package  when  I  started,  he  said,  but  as  prices  have 

7  gone  up  and  down  on  the  replacements  and  the  subassemblies, 

8  he  said,  I've  had  to  alter  the  quantities. 

9  Q    So  it  was  your  understanding  that  he  had  an 

10  absolute  ceiling  of  money? 

11  A    Yes,  sir.   It  was  very  clear  on  this  particular 

12  project. 

13  Q    And  I  believe  you  told  us  in  April  that  when  the 

14  amount  got  up  to  over  $4.1  million,  he  started  getting 

15  excited? 

16  A    Yes,  sir,  that  is  true. 

17  Q    So  would  you  take  it  that  that  was  the  amount  of 

18  money  that  he  had?  That  was  the  ceiling? 

19  A    Sir,  knowing  how  those  folks  worked,  he  might  have 

20  had  another  $15,000  to  $50,000,  but  I  doubt  he  would  have 

21  had  any  more  than  that.   They  normally  when  they  were 

22  estimating  Army  support  knew  that  our  incremental  costs  were 
2  3  unpredictable,  and  they  would  normally  add  a  certain 

24  percentage  to  account  for  variability. 

25  Q    I'm  not  sure  if  I  asked  this  before.   I  do 























2  0 






understand  that  you  told  us  that  the  price  list,  or  the  list 
of  items  that^^^^^^^^^Hinitially  gave  you  came  from 
overseas.   Did  you  ever  ask^^^^^^^^^^^^J  overseas?   Or  who 
prepared  it? 

A    Yes,  sir.   That  issue  surfaced  early  on  in  the 
first  few  days  of  the  Crocus  Mission,  because  we  couldn't 
read  some  of  the  items.   It  tooks  hours  and  hours  and  hours 
that  really  the  Taxpayer  paid  for,  I  say  that  because 
whether  the  Agency  paid  us  or  MICOM  paid  us,  John  Chapman 
who's  an  engineer  and  his  assistant  Bill  Reyer  are  both 
engineers.   These  are  highcut  individuals  who  spent  many 
hours  deciphering  through  detective  work  this  list. 



^aJ/BV         Ja) 



The  other  issue  was  that  I  had  never  heard  the 
White  House's  name  mentioned  in  the  three  years  I  had  been 
at  DSLOG  as  controlling  the  decision  on  funding  on  a 



























Did  you  ever  get  into  the  issue  wit^ 

about  how  the  Agency  was  going  to  price  these 
items  once  they  left  the  Agency?_ 
A    No,  sir. 

Q    So  just  for  the  record,  no  one  ever  told  you  that 
the  White  House  was  going  to  take  the  HAWK  parts,  for 
example,  and  simply  multiply  by  3.7  to  come  up  with  the 
figure  that  they  would  use  for  the  pricing? 

A    No,  sir,  I  am  not.   I  am  certainly  aware  of  it 
now,  having  read  the  papers  and  watched  the  news,  but  at  the 
time  it  would  not  have  entered  my  head.   That  was  one  item 
that  did  not,  that  they  were  going  to  resell  the  stuff. 
That  was  not  their  basis  of  operation. 

Q    And  to  close  the  loop  on  the  HAWK  repair  parts, 
they  were  transferred  to  "kelly  Air  Force  Base?   Is  that 

A    Yes,  sir.   All  of  them  were,  initially. 

Q    And  then  they  were  transported  tc 

A    By  truck,  yes,  sir. 

Q    And  did  you  ever  get  a  call  from^^^^^^^^H  saying 





1  that  everything  had  gone  fine  and  they  had  lifted  off? 

2  A    Yes,  sir,  I  did. 

3  Q    Now  let  me  ask  you  about — 

4  KR.  KREUZER:   Can  I? 

5  MR.  SAXON:   Sure.  ^-— _-«-. 

6  MR.  KREUZER:   Again  on  this  call  froni^^^^^^B  when 

7  did  he  call  you? 

8  THE  WITNESS:   Sir,  without  my  notes--it's  been 

9  enough  months  now--I  would  just  have  to  tell  you  that 

10  generically  based  on  the  date  that  we  executed  this  mission, 

11  we  had  two  days,  which  we  actually  took  about  three-and-a- 

12  half  when  we  were  all  said  and  done — even  at  the  end, 

13  Murphy's  law  worked  against  us  a  little,  and  even  with  the 

14  prepositioning  we  still  had  eight  different  locations,  seven 

15  at  DLA  and  Redstone  to  deal  with,  and  there  were  still,  as 

16  we  counted,  a  few  items  that  didn't  get  to  the  assembly 

17  point.   So  it  took  us  until  about  the  end  of  the  fourth  day 

18  to  get  it  all  assembled  atl 

19  And  whatever  day  that  was  from — and  I  have  a 

20  message  in  ray  records,  John,  that  you  could  look  at  that 

21  gave  the  execute  date  and  time.   I  don't  remember  what  the 

22  date  is,  but  it's  called  "Support  of  Project  Crocus."   That 

23  was  the  same  message  that  certified  the  funds,  and  it  also 

24  listed  everything  we  were  asking  for.   The  prices  that  are 
2  5  in  that  message  are  the  prices  that  have  been  fed  up  to  us. 





























It  was  about  three  days  after  that,  Roger,  that  we 
got  a  call  fromH^^^^^^^^^Hto  tell  us  that  everything 
had  gone  successfully.   He  declined  to  tell  me  how  they  had 

Once  again  I  think,  just  in  the  news  that  has  been 
made  available  to  me  as  I've  watched  the  testimony,  it  would 
appear  as  though  I  didn't  get  the  whole  story  on  how  they 
left^^^^^^^^^^H  because  I  was  told  that  we  were  not  using 
Defense  assets,  and  that  appears  not  to  have  been  the  case. 
BY  MR.  SAXON:   (Resuming) 
Q    Let  me  ask  you  about  the  HAWK  radars.   I  believe 
you  told  us  in  April  that  the  ANMPQ-48,  the  two  radars  that 
were  requested  on  this  initial  list,  werel 

^^^^^^^^^^^^^^^^^  Is  that  correct? 
A    Yes,  sir. 

Q    And  what  was  the  price  of  one  of  those  radars  per 

A    Sir,  as  I  recall  on  the  old  one,  and  there's  two 
different  numbers  that  come  to  me  months  later,  one  is 
ANMPQ-46.   I  think  the  46  was  the  earlier  version,  the  Pre- 
Phase  II  PIP  configured  radar,  and  that  the  48  was  the  later 

25   version. 








The  older  version  was  about  $3.6  million  a  copy, 
as  I  remember.   I  can  tell  you  almost  anything  you  want. 
That  was  a  very  interesting  saga  as  we  went  through  that. 

Q    AS  I  understand,  the  radars  were  not  on  the 
initial  list  itself.   Is  that  correct? 

A    No,  sir,  they  were  not  at  all. 

|^^H|^^^^HI|^^^HPsaid  he        to 
in  essence,  $7  million  worth  of  radars.   Is  that  right? 

A    Yes.   And  I  was  benefited  by  two  pieces  of  advice. 
I  went  up  to  seek  advice  from  my  old  friend  Tom  Taylor.   I 
said,  Tom,  tell  me  about  this.   And  he  said,  Chris,  for  that 
amount  of  money,  he  says,  you  can't  consider  that  part  of 
the  same  request.   He  said,  we've  turned  repair  parts  into 
multi-million  dollar  end  items.   He  said,  I  think  you  need 
to  tell  Gen.  Russo  that  this  ought  to  be  a  separate  request, 
so  I  want  down  to  see  Gen.  Russo.   He  said,  you 
|||^^l|H|HHHBtell     that    a  request. 

And,  he  said,  frankly--and  Gen.  Russo  and  I  are  both  short 
now,  both  of  us  are  leaving  within  a  few  weeks.  Jyaj|^ 
[that  needs   ■  come  ov    _h rough  tht 
That's  What  we  told||||||||||||msend 
put  it  on  the  piece  of  letterhead. 

Q    As  a  traditional  request  through  thel 

traditional  reqxiest.   And  that's  what  Gen. 

traditional  request.   A 




1  Russo  advised  me.   I  called^^^^^^^^Hand  told  him  that. 

2  He  didn't  have  any  problem  with  that.   He  said,  fine.   The 

3  next  question  was,  go  get  some. 

4  Q    He  asked  you  if  any  were  available? 

5  A    And  we  found  out  very  quickly  that  there  were  only 

6  two  in  the  entire  Army  inventory  stored  at  Letterkenny,  the 

7  property  of  the  Iranian  Government,  kind  of  up  on  blocks  in 

8  cold  storage  so  to  speak  for  about  seven  or  eight  years. 

9  Q    These  were  the  ones  that  were  part  of  the  assets? 

10  A    That  were  frozen  at  the  time  that  Jimmy  Carter 

11  froze  Iranian-owned  assets  in  the  United  States. 

12  Q    And  who  told  you  that?  Mr.  Chapman? 

13  A    John  Chapman  did.   And  it  wasn't  very  long  after 

14  that  until  he  told  me  that  it  also  took — he  said,  Chris,  he 

15  said,  you  can't  just  tell  me  you  want  these  radars.   He 

16  said,  there's  a  whole  host  of  players  involved.   He  said, 

17  you're  going  to  have  to  get  Treasury,  State,  and  the  White 

18  House. 

19  He  said  he  didn't  know  all  the  names  but  I 

20  believe,  John,  that  he  gave  me  the  name.   It  could  have  been 
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^Hin  the 

22  the  Judge  Advocate  General.   One  of  those  two  gentlemen 

23  within  a  day  or  two  had  given  me  the  names  of  the  key 

24  players,  and  I  had  all  of  them. 

25  There  were  three  different  DoD  offices,  as  well  as 




1  the  Treasury  Department,  the  State  Department,  and  the  White 

2  House. 

3  Q    Was  the  Defense  Security  Assistance  Agency  also 

4  involved? 

5  A    Yes,  it  was;  the  Director  was;  but  there  were 

6  other  DoD  offices,  as  well  as  that.   I  want  to  say  that  two 

7  critical  names  ring  a  bell:   Diane  Blondell  and  Sally 

8  Cummings,  but  I  don't  remember  which  place  they  were 

9  anymore. 

10  Q    I  believe  Sally  Cummings  was  at  Treasury,  and 

11  Diana  Blondell  was  at  DSAA. 

12  A    Okay.   There  was  another  gal,  though,  that  was  a 

13  main  player  in  this.   That  was  the  gal  with  the  State 

14  Department.   Anyway,  I  talked  to  the  gal  at  the  State 

15  Department. 

16  Q    After  you  got  these  names  either  from  Chapman  or 

17  from  Bathan  you  began  to  make  your  calls? 

18  A    Yes.   I  called  the  gal  at  the  State  Department, 

19  and  I  also  talked  to  two  of  the  different  people  in  the  DoD 
2  0  agencies.   I  talked  to  somebody  at  the  Defense  Security 

21  Assistance  Agency,  and  there  was  another  office,  and  1  want 

22  to  say  Office  of  Technology  Transfer  was  the  DoD  level 

23  office  that  I  talked  with  the  Lieutenant  Colonel  in. 

24  He  told  me  that  he  personally  didn't  have  any 

25  trouble  at  all,  but  that  he  needed  to  know  where  they  were 





1  going.   Again,  the  Office  of  Technology  Transfer,  he  says 

2  they  sure  aren't  going  to  go  back  to  Iran.   That's  what  the 

3  guy  in  the  Office  of  Technology  Transfer  told  me.   He  said, 

4  we  don't  ever  have  any  intention  of  giving  these  back.   He 

5  said,  I  don't  have  any  problem  releasing  them,  but  we  need 

6  to  run  an  interagency  staff  paper.   The  gal  at  the  State 

7  Department  told  me  the  same  thing. 

8  She  also  told  me  that  day  she  was  against 

9  releasing  them,  she  said,  because  they  were  in  the  middle  of 

10  negotiations  with  the  Hague  right  then  and  there  with  Iran 

11  on  release  of  all  these  assets  and  reparations.   So  she 

12  said,  for  the  record  I'm  against  it,  she  said,  but  I'm 

13  willing,  she  said,  if  the  White  House  is  going  to  support 

14  it,  to  be  behind  you. 

15  And,  she  said,  what  we  need  to  do  is  have  all  us 

16  sit  at  a  big  table  in  one  room — she  says,  we  can  do  it  over 

17  here  in  my  office — and  she  said  she  knew  these  other 

18  players.   All  these  names  of  these  people  were  all  connected 

19  together.   They  all  knew  each  other. 

20  Q    And  this  is  Blondell  you're  talking  about? 

21  A    Hell,  the  gal  at  the  State  Department.   I  think 

22  that  Diane  was  at  the  State  Department,  as  I  recall.   She 

23  may  have  been  at  one  of  these.   But  the  gal  who  was  at  the 

24  State  Department,  knew  all  the  other  players,  was  willing  to 

25  help  me  run  an  interagency  staff  action  so  I  didn't  have  to 





1  run  all  over  the  City.   That  is,  we  would  sit  all  the 

2  players  at  one  table  and  come  up  with  a  position  paper  where 

3  everybody  would  chop  on  it  and  I  could  take  it  away  with  me. 

4  To  my  consternation,  about  a  day  later  Gen.  Russo 

5  called  me  up  and  said  he  had  had  a  call  f  ron^^^^^^^^|  to 

6  complain  about  my  doings.   This  was  the  first  complaint  I 

7  had  ever  had  from  Gen.  Russo  in  three  years. 

8  Q    Now  had  you  contacted ^^^^f^^^^H  before  you 

9  started  making  these  calls  to  tell  them  what  you  were  going 

10  to  do? 

11  A    After  I  had  found  out  that  they  were  available,  I 

12  told^^^^^^Ha  lot  of  work  needed  to  be  done  to  get  them 

13  released.   He  told  me  to  go  ahead  with  that.   I  hadn't  given 

14  him  any  details  of  it.   He  just  said,  well,  go  ahead  and  get 

15  ready  to  do  that. 

16  Q    As  you  understood  it  at  the  time,  you  were  doing 

17  what  was  necessary  to  execute-- 

18  A    Absolutely.   And  at ^^^^^^|request . 

19  Q    So  Gen.  Russo  called  up  to  say  thatj 

20  complained? 

A  ^^^^^^^^^^^^^they  were  Iranian-owned.   The 

22  radars  are  Iranian  owned.   I  told  him  that  there  were  a  lot 

2  3  of  people  that  needed  to  get  involved  to  get  them  released. 

24  He  said,  go  ahead  and  get  that  done. 

25  The  next  thing  I  knew ,^^^^^^^H had  called  Gen. 





1  Russo  about  my  conduct  and  said  the  word  had  gotten  back  to 

2  him  to  the  Agency  that  I  was  muddling  around  in  this 

3  throughout  the  government,  and  to  cease  and  desist 

4  immediately,  and  who  in  the  hell  gave  me  authority  to  do 

5  that? 

6  So  I  was  a  little  bit  concerned,  and  I  told  Gen. 

7  Russo  was  I  was  working ^^^^^^^^^|  and  I  hadn't  had  any 

8  complaints  from  him.   He  knew  that  they  were  Iranian  owned. 

9  So  anyway,  we  ceased  and  desisted  for  just  a  very  few  days. 

few  days  later,  ^^^^^^^^^^^^^^^^^^^Hs ays, 

11  on  the  radars.   He  said,  we  need  to  get  them  inspected  to 

12  see  if  they  work. 

13  You  can  imagine  how  I  felt,  but  I  said  we'll  go. 

14  And  John  Chapman,  in  about  two  days,  gave  me  an  estimate  of 

15  the  dollars  it  took  to  get  them  inspected.   That  was  one  of 

16  the  pieces  of  paper,  John,  that  we  did  get  from^^^^^^^H 

17  ^^^^^^^^^^1  was  funding  to  go  and  inspect  and  fix  some 

18  parts  on  the  radar.   There  were  some  small  parts  that  John 

19  Chapman  felt  would  have  deteriorated  in  the  eight  years. 

20  Q    Let  me  back  up  a  moment  before  we  get  to  the 

21  testing  of  the  radars  and  so  forth.   Do  you  recall  your 

2  2  reaction  when  Chapman  first  told  you  that  these  radars,  the 

2  3  two  that  were  frozen  assets,  belonged  to  Iran? 

24  A    Do  I  recall  my  reaction?   I  may  have  told  you  back 

25  in  April,  and  I'm  not  sure  anymore,  I  certainly  was 






























surprised.   If  you  want  to  lead  the  witness  a  little  bit, 
I'll  help  you  lead  me.   I'd  say  that  at  that  point  there 
were  glimmerings  of  wondering. 

I  knew  that  we  had  a  country  that  didn't  want  to 
participate  in  the  modernization  program.   We  had  a  list 
that  we  couldn't  get  to  the  customer  on.   I  would  have 
started  narrowing  my  choices  at  that  point,  if  somebody  had 
asked  me.   To  tell  you  the  truth,  the  times  were  so  busy  I 
didn't  have  much  time  to  do  much  idle  thinking  and 

Q  Well,  after^^^^^fcalled  Russo,  and  Gen.  Russo 

passed  along  his  displeasure  that  you  were  checking  around 
town,  you  communicated  that  back  toj 

A    Oh,  he  and  I  had  a  pretty  frank  one-on-one. 

I  told  him  what  I  thought  about  all 
this.   I  said,  fella,  when  you  tell  me  you  want  something 
and  you  want  me  to  go  after  it,  I  said,  somebody  in  these 
places  is  a  blabbermouth  and,  I  said,  I  feel  kind  of  at  a 

I  said,  if  you  hadn't  wanted  me  to  go  do  it,  I 
said,  you  should  have  told  me  that  when  I  told  you  that  I 
needed  to  get  a  lot  of  parties  involved. 

Q    And  was  it  at  that  point  that  he  told  you  just  to 
kill  it? 




1  A    He  told  me  to  kill  it,  and  don't  talk  to  another 

2  soul  about  it  was  the  guidance  at  that  time. 

3  Q    So  at  that  point  you  assumed  that  the  radar  issue 

4  was  dead? 

5  A    I  did. 

6  Q    Now  a  couple  of  days  later,  about  four  days  later, 

7  you  say  he  called  you  back? 

8  A    He  surfaces  right  back  up  again. 

9  Q    And  then  he  wanted  two  post-Phase  II  radars,  I 

10  believe? 

11  A    That  was  the  next  project.    This  caused  great 

12  consternation  and  anger  down  at  MICOM.   I've  got  two 

13  engineers  now  that  have  worked  literally  hundreds  of  hours 

14  over  a  period  of  several  months  with  me  trying  to  do  their 

15  damnedest.   They've  really  pulled  out  every  stop  doing  an 

16  outstanding  job. 

17  John  Chapman  says,  Chris,  what  in  the  hell  do  you 

18  want  two  post-Phase  II  configured  radars  for?   He  said, 

19  surely  they  can't  work  with  any  of  these  systems  you've  got. 

20  He  said,  are  these  going  to  the  same  country? 

21  I  called^^^^^^^^fto  ask  him  that.   He  said,  I'm 
2  2  not  going  to  address  that.   He  said,  treat  this  as  a 

23  separate  request.   Of  course,  on  its  face  it  looked  like  all 

24  part  of  the  same  project.   I'm  going  right  to  the  same  guys, 

25  the  same  time  frame,  same  office  of  DA.   John  was  really 





1  mad.   He  went  around  and  he  found  a  couple  of  post-Phase  II 

2  configured  radars.   One  of  them,  as  I  recall,  was  being 

3  modernized  for  the  Marine  Corps,  and  we  were  going  to  give 

4  them  a  brand-new  one  off  the  manufacturer's  assembly  line 

5  and  take  the  one  that  was  being  modernized. 

6  That  was  one  of  the  two.   I  think  we  had  one  in 

7  stock. 

8  Q    When  you  asked ^^^^^^H whether  these  were  for  the 

9  same  customer-- 

10  A    He  just  said,  I'm  not  going  to  answer  that.   He 

11  never  said  they  weren't.   He  just  said,  I'm  not  going  to 

12  answer  that.   He  never  said  they  weren't;  he  just  said,  I'm 

13  not  going  to  answer  that. 

14  Q    When  he  asked  you  about  the  two  Post-Phase  II 

15  radars,  did  you  communicate  that  to  Gen.  Russo? 

16  A    Yes.   And  Gen.  Russo  I  think  had  the  same  concerns 

17  I  did.   He  said,  it  didn't  make  any  sense.   He  said  all 

18  these  so  long  had  been  100  percent  consistent;  they  didn't 

19  want  anything  to  do  with  Post-Phase  II  configured  items,  and 

20  all  of  a  sudden  when  we  told  them  something  Pre-Phase  II 

21  wasn't  available. 

22  And  then  we  went  a  few  more  days  after  this 

2  3  scenario,  John,  and  we  dropped  that  issue,  and  we  went  right 

2  4  back  to  the  Pre-Phase  II  configured  radars. 
25        Q    On  the  testing  issue? 





1  A    Yes.   We  told  them — one  of  the  things  I'm  not  sure 

^^^^^^^^^^^^^^^H  knew,  since  he's     an  engineer  or  a 

3  HAWK  person,  is  we  told  them  there  was  no  way  to  use  any 

4  part  of  that  Pre-Phase  or  Post-Phase  II  system  with  the  old 

5  systems.   I  said,  the  electronics  are  completely  useless  if 

6  you  have  the  old  system.   I  said,  it's  not  usable.   And  I'm 

7  not  sure  he  understood  that  when  he  first  came  to  us  asking 

8  for  that  as  an  alternative. 

9  Q    On  the  testing  did  you  indicate  that  you  would 

10  need  certification  of  funds  in  order  to  go  forward? 

11  A    Yes,  sir,  I  did. 

12  Q    And  that  was  provided? 

13  A    And  those  were  provided.   And  we  did  go  forward 

14  and  test  them,  and  they  were  found  out  to  be  usable  with 

15  only  minor  repairs  required,  less  than  a  few  thousand 

16  dollars. 

17  Q    And  the  amount  of  money  for  the  testing,  I 

18  believe,  was  $24,000? 

19  A    Yes,  sir.   I  was  going  to  say  just  under  $25,000. 

20  Q    Now  I  believe  you  indicated  when  you  were  making 

21  your  calls  around  on  the  Pre-Phase  II  radars  you  talked  to 

22  someone  in  the  DoD  Technology  Transfer  Office? 

23  A    Yes.   It's  called  the  Office  of  Technology 

24  Transfer,  sir. 

25  Q    And  he  told  you  that  it  didn't  matter  what 





1  negotiations  were  going  on  in  the  Hague,  we  weren't  going  to 

2  provide  this  to  Iran.   Did  he  say  why? 

3  A    Well,  okay.   By  the  time  I  talked  to  that  Colonel, 

4  I  knew  that  the  State  Department  was  against  giving  them  up, 

5  period.   They  didn't  want  them  taken  out  of  the  inventory. 

6  What  the  State  Department  gal  told  me  was  they  were  going  to 

7  pay  Iran  for  those  things.   There  wasn't  any  thoughts  on  her 

8  part,  either,  to  give  up  the  radars  to  Iran.   She  didn't 

9  want  the  negotiations,  which  she  said  had  reached  a  very 

10  delicate  stage,  to  be  disrupted. 

11  The  Colonel  said,  I  don't  really  give  a  rat's  ass 

12  about  the  negotiations — I'm  quoting  him — he  said,  because 

13  we're  never  going  to  give  those  back  to  Iran.   He  said,  as 

14  far  as  I'm  concerned,  if  you  give  the  money  to  the  Treasury 

15  Department — there  was  an  office  over  there  that  was  kind  of 

16  their  representative  to  put  money  in  for  the  reparations 

17  account — he  said,  as  long  as  that  money  is  in  there,  before 

18  those  radars  leave  Letterkenny,  he  said,  I  don't  have  any 

19  problem  with  that. 

20  He  also  reiterated  that  the  State  Department  and 

21  other  DoD  offices,  including  DSAA,  the  Defense  Security 

22  Assistance  Agency,  needed  to  all  be  players.   He  said  he 

23  felt  that  Mr.  Weinberger's  representative  also  would  want  to 

24  have  a  part  in  it,  meaning  somebody  out  of  Mr.  Weinberger's 

25  own  office. 





1  And  he  also,  I  think  he  also  said  the  DUSD  policy, 

2  and  this  is  Deputy  Under  Secretary  of  Defense  policy. 

3  Q    When  you  were  talking  to  the  Colonel  in  the  Office 

4  of  Technology  Transfer,  you  told  us  in  April  he  said  we 

5  weren't  going  to  give  them  to  Iran  because  they  were  our 

6  enemy?   Is  that  right? 

7  A    That,  plus  he  said  under  the  Arms  Export  Control 

8  Act — once  again,  I  was  very  familiar  with  this  Act;  the 

9  Colonel  was,  too--under  that  Act,  we  weren't  giving  anything 

10  to  Iran.   Now  we're  here  prosecuting  people  right  and  left 

11  in  the  Federal  Courts  for  selling  stuff  to  Iran.   They  were 

12  considered  an  enemy,  and  that  was  considered  high 

13  technology,  and  that  fell  under  the  rules.   The  Colonel  was 

14  very  clear  on  that.   That  was  stuff  we  didn't  give 

15  nonfriendly  countries. 

16  Q    Do  you  recall  Diana  Blondell  at  DSSA  telling  you 

17  that  if  she  was  going  to  go  forward  in  processing  this 

18  request,  that  you'd  have  to  get  a  letter  from  President 

19  Reagan? 

20  A    As  a  matter  of  fact,  I  think  that  is  what  Diana 

21  told  me.   Different  people  that  I  had  talked  to  around  town 

22  had  different  views.   When  I  called^^^^^Hand  told  him  I 

23  would  be  happy  to  take  care  of  that,  I  had  no  problem  in 

24  picking  up  the  phone  and  calling  the  White  House^^ I^  had 

25  talked  to  other  people  over  there  in  the  past! 





1  ^^^^_,^ 

2  I  said,  I  will  be  happy  to  go  and  deal  with 

3  the — because  the  Colonel  knew  who  to  call  at  the  White 

4  House.    The  guy  up  in  the  Office  of  Technology  Transfer,  I 

5  was  talking  to  all  these  people.   Kind  of  it  was  a  fluid 

6  sit.   You  know,  I  was  calling  one  person,  calling  another 

7  one  back. 

8  And  when  Diane  did  tell  me  that  and  I  surfaced  it 

9  ^^^^^^^^^H  and  just  told  him  that  I  needed  that,  I  said 

10  can  we  get  that,  or  do  you  want  me  to  go  for  it  and  get  it? 

11  And  that  caused  great  consternation,  too.   He  said,  don't 

12  talk  to  anybody  at  the  White  House.   Because  I  told  him  that 

13  I  had  somebody  that  would  do  it  for  us.   And  again,  I 

14  thought  he  was  interested  in  speed  and  accomplishing  the 

15  mission.   I'd  heard  the  White  House  mentioned  all  along  as 

16  the  main  party  behind  supporting  the  mission.   It  didn't 

17  seem  to  me,  then,  that  they'd  have  any  trouble  supporting  a 

18  piece  of  paper  to  come  over  to  DSSA. 

19  But  that  was  where  he  told  me,  don't  do  anything 

20  else  on  that.   He  said,  we  will  do  all  of  the  required 

21  paperwork,  all  of  the  interagency  stuff. 

2  2  Q    At  the  time,  did  you  find  that  curious? 

2  3  A    Yes,  I  did.   This  was  highly  unusual.   Never  in 

24  the  past — I  had  worked  on  other  complicated  matters  for  the 

2  5  Agency  that  did  involve  other  government  agencies,  and  I  had 






























never  had  any  problem  going  forward  with  them.   Even  in 
dealing  with  principals  at  other  agencies — I  would  mention 
the  Department  of  Transportation,  the  FAA,  and  other — they 
had  never  had  any  problem  with  me  doing  all  the  pieces  to 
get  a  job  done.   That's  because  I  was  always  doing  them  for 
Department  of  Army. J 

That  is  when  they  flat  asked  me  to  back  out. 
Stop.   Don't  do  any  more.   We  will  do  all  the  required 
coordination.   When  it's  all  f inished,^^^^^^^^Hwe  will 
come  and  tell  you  to  go  release  the  items. 

Q  Did  Israel  have  any  of  our  old  radars  on  their 

A    Sir,  Israel  was  one  of  the  FMS  clients.   I  don't 
know  specifically  what  they  had.   I  would  not  have 
thought — I'm  speculating;  MICOM  could  give  you  a  better 
answer  today — I  would  have  thought,  being  one  of  the  closer 
allies,  they  would  have  been  one  of  the  first  modernized  and 
wouldn't  have  had  any  old  items  left. 

There  were  many  countries  that  were  fully 
modernized  by  the  time  that  John  Chapman  and  I  talked. 

Q  If  they  had  any  of  the  old  radars,  it  would  be 
possible,  I  guess,  for  the  Agency  to  request  the  two  new 
radars  on  the  theory — 





1  A    That  would  make  sense. 

2  Q    — that  they  could  provide  them  to  say  Israel,  and 

3  then  Israel  could  sell  the  old  ones  to  Iran? 

4  A    Yes,  sir.   That  would  make  sense.   But  I  did  not 

5  know  any  inklings  of  that  at  the  time. 

6  Q    Do  you  have  any  knowledge  of  efforts  in  late  1985 

7  to  replenish  Israeli  stocks  in  either  TOW  missiles  or  HAWK 

8  missiles,  whole  systems? 

9  A    Sir,  I  have  done  some  work  for  Israel,  but  not  on 

10  those  two  systems  myself.   And  again,  if  we  did  any  other 

11  work  it  was  not  done  by  our  office  after  Jeff  Stevens 

12  retired. 

13  Q    Now  I  asked  you  from  the  outset  about  the  issue  of 

14  low-balling  on  price,  and  you  answered  no.   Is  it  safe  to 

15  say  that  the  Agency  on  both  the  TOWs  and  the  HAWKs  wanted 

16  the  lowest  price  possible? 

17  A    Yes,  sir.   I  am  convinced  of  that. 

18  Q    And  do  you  think  that  on  both,  or  on  just  the 

19  HAWKs,  they  had  an  absolute  ceiling? 

20  A    Sir,  1  didn't  get  the  impression  on  the  TOWs  that 

21  there  was  an  absolute  ceiling,  only  because  that  I  went  back 

22  to  get  additional  money  and  we  got  it  even  though  there  was 

23  a  lot  of  whining  and  sniveling.   On  the  HAWKs^ 

24  was  adamant  at  the  outset  that  we  were  going  to  have  to  live 

25  within  a  fixed  budgs 





1  Q    And  it  is  quite  clear  from  your  testimony,  I 

2  guess,  that  they  wanted  no  substitutions  with  the  TOW 

3  missiles  to  upgrade  them  to  the  ITOW? 

4  A    That  is  true,  sir.   They  didn't--well,| 

5  ^^^^^^^^^^^^^^  said  one  thing  that  will  impact  here.   He 

6  said,  we  don't  need  anything  more  than  that  to  meet  the 

7  threat  that  we  have.   That  was  the  reason  for  not  needing 

8  anything  bigger  than  that. 

9  Q    At  any  time  in  your  activities  with  Snowball  and 

10  Crocus,  did  you  have  any  dealings  with  the  NSC? 

11  A    No,  sir,  I  did  not. 

12  Q    You  do  recall,  however, ^^^^^^^^^^Hmentioned  NSC 

13  a  couple  of  times? 

14  A    Yes,  sir,  I  did. 

15  Q    Did  anyone  else  mention  the  NSC  with  whom  you  were 

16  dealing? 

A  ^^^^^^^^^^^^^^Hmay 

18  Q    Did  Ms.  Crawford  or  anyone  in  the  General 

19  Counsel's  Office  have  any  input  on  pricing  decisions? 

20  A    Okay,  anyone  in  the  General  Counsel's  Office?   Tom 

21  Taylor  had  the  only  input,  and  that  was  to  advise  Gen.  Rasso 

22  that  the  Economy  Act  was  the  proper  basis,  as  far  as  he  was 

23  concerned.   And  that  was  true  based  on  historical  work,  as 

24  WTll  as  the  standard  legal  advice  that  had  been  provided  to 

25  us  for  a  long  time. 































The  other  fellow  that  had  some  input  on  the 
tricing  was| 

He  too  had  been  involved  in  reviewing  many,  many 
of  the  Agency's  funding  practices  and  had  met  extensively 
with  their  Office  of  the  General  Counsel. 

I  believe^^^^^Hand  1  talked  one  or  more  times 
on  pricing  issues  on  these  two  projects,  but  it  was  only 
from  the  standpoint  of  was  the  Economy  Act  the  propose 
basis?   I  think  I  was  concerned  because  of  the  size  of  the 
project.   These  were  multi-million  dollar  projects,  not  a 
little  project. 

Q    Let  me  ask  you  about  the  computer  system  used  by 
MICOM  and  Anniston  Army  Depot.   First  in  a  general  way.   Do 
you  have  any  knowledge  about  that  system  that  they  use? 

A    Sir,  I  have  to  tell  you  I  know  nothing  about  it  at 

Q    Do  you  know  that  they  have  the  same  computer 
system,  and  that  the  MICOM  system  at  Redstone  feeds  the  one 
at  Anniston? 

A    Sir,  I  didn't  know  that. 

Q    Then  you  wouldn't  know  that  they  essentially 
should  have  the  same  data  in  each? 

A    No,  but  it  sounds  logical. 

Q    Let  me  ask  a  specific  question  about  readiness 
impact  and  depletion  on  the  HAWK  repair  parts.   I  really 





1  want  you  to  help  educate  me  here  as  to  when — I  have  in  mind 

2  a  particular  snapshot  as  to  the  readiness  data.   We  have 

3  been  told  that  at  one  point  as  the  HAWK  repair  part  issue 

4  was  being  worked,  the  data  showed  that  if  we  met  the 

5  requirement  of  1034  line  items  in  its  entirety,  that  there 

6  would  be  significant  depletion  with  regard  to  43  items;  that 

7  on  15  of  the  items  there  would  be  complete  and  total 

8  depletion  from  the  existing  inventories;  and  on  11  of  the 

9  items  it  would  be  greater  than  50  percent  depletion — 

10  A    Those  are  my  notes,  sir,  and  that  is  true. 

11  Q    — and  that  on  20  of  the  items,  it  would  not  be  50 

12  percent,  but  would  still  be  called  significant  enough  to  be 

13  classified  as  "significant  depletion"? 

14  A    Yes,  sir.   Those  are  notes  that  I  prepared  for 

15  Gen.  Russo  based  on  help  from  John  Chapman  at  MICOM. 

16  Q    Okay.   Do  you  recall  when  those  figures  were  in 

17  front  of  you,  and  when  in  the  decision  process  these  figures 

18  existed? 

19  A    Well,  they  were  in  front  of  me  before  we  put  the 

20  final  package  together. 

21  Q    If  you  can  understand  what  I'm  trying  to  ask,  I 

22  understand  that  readiness  data  is  a  rolling  set  of  figures, 
2  3  and  that  if  you  look  at  one  set  on  one  day,  as  items  are 

24  used,  as  items  come  out  of  the  pipeline,  as  items  are 

25  relocated,  the  figures  will  change  the  next  day,  and  even 






























the  next  day,  and  so  forth. 

So  let  me  ask  it  this  way:   At  the  point  at  which 
the  decision  was  made  to  actually  go  forward  and  meet  the 
requirement  on  HAWKs,  what  is  your  recollection  as  to 
depletion  of  items  from  the  data  you  have  in  front  of  you, 
and  that  Gen.  Russo  had  in  front  of  him? 

A    Without  looking  at  the  paperwork  that  I  prepared 
in  the  matrix,  which  I  kept  all  of  that  and  I  guess  you  have 
seen  all  of  it.  Gen.  Russo's  main  concern  was,  was  this 
going  to  have  a  major  impact  on  U.S.  Armed  Forces? 

As  I  recall,  the  answer  back  from  John  Chapman  was 
that  it  would  have  a  minimal  impact  on  U.S.  Armed  Forces 
because,  he  said,  the  parts  lost  would  mainly  afl 

that ^^^ 

^^    said  we  could  have  all 
those  parts  back  in  inventory. 

John  Chapman  was  not  greatly  concerned  about 
giving  up  many  of  the  items,  he  said,  because  as  he  finished 
his  modernization  program,  he  said,  we  wouldn't  be  stocking 
any  more  of  many  of  those  items.   And,  he  said,  some  of  them 
if  he  could  get  the  items  modernized  before  the  request  came 
in,  he  said,  then  it  is  a  moot  point. 

Again,  the  whole  idea  of  the  modernization  is  to 
eliminate  that  expensive  duplication  of  inventories. 

Q    Was  it  his  sense  that  there  would  have  been  some 





1  impact  on  readiness,  though,  with  regard  to  our  FMS 

2  customers  and  availability? 

3  A    Yes,  there  was.   John  felt  that  there  would  be. 

4  The  final  decision  at  the  end  that  I  participated  in  was 

5  that  we  were  going  to  support  this  mission. 

6  Q    And  for  the  record,  these  FMS  customers  would  be 

7  our  allies  and  people  we  had  chosen  to  sell  to. 

8  A    Sir,  that  is  true. 

9  Q    Do  you  have  any  idea?   Did  you  ever  provide  any 

10  data  as  to  which  countries,  and  the  extent  of  the  impact? 

11  A    No,  sir. 

12  Q    Would  John  Chapman  have  had  that  in  front  of  him? 

13  A    He  should  have  had  it  handy,  but  keep  in  mind, 

14  John,  on  some  of  these  items — let's  say  the  15  where  we  ran 

15  them  down — he  might  have  only  got  one  request  in  every  year- 

16  and-a-half.   Some  of  the  items  were  very  low  usage.   Some  of 

17  them  cost  $100,000  apiece.    It  was  one  that  would  wear  out 

18  only  through  gross  accident. 

19  There  was  one  he  had  that  might  not  ever  have  been 

20  requested  in  the  next  12  months.   So  there  was  some,  as  you 

21  said,  on  the  picture  window  look,  the  readiness  issue  was 

22  one  of  a  lot  of  "ifs."   If  one  broke  somewhere  in  the  world, 
2  3  one  customer  may  have.   His  average  demand  had  shown  on  many 

24  of  those  critical  items  that  there  was  very  low  usage. 

25  Some  of  the  items,  too,  that  we  ran  down  to  zero 






























he  was  going  to  replete  the  inventory  on  in  a  very  short 
period  of  time.   That  is,  he  was  going  to  replenish  it.   So 
we  worked  a  very  tough  set  of  decision  processes.   I  think 
the  major  concern  was  the  impact  on  the  Army,  and  that  was 
the  driving  factor  in  that  there  was  determined  to  be  no 
real  impact  on  the  Army. 

Q    I  understand  that  you  did  not  go  through  thel 
Ion  Snowball  or  Crocus,  so  you  did  not  dea] 
At  any  point  as  you  were  working  these  requirements, 
did  anybody  think  to  ask  whether  the  Joint  Chiefs  knew 
anything  about  this  operation,  or  had  approved  it? 

asked^^^^^^^^^^^^^^   Vou  know,  I  guess  the 
first  concern  was  that  when  I  was  dealing  with  the  Defense 
Logistics  Agency — that's  a  DoD-level  agency — I  felt 
uncomfortable  about  leavir 

I  was  instructedb^^^^^^^^^^Babsolutely  not  to 
deal  with  anybody  in^^^^^^^^^^l  And  that  was  not  even 
available  for  negotiation.   Just  "don't  do  it,  at  all." 

Q    For  the  record,  do  you  have  any  idea  when  the 
Chairman  of  the  Joint  Chiefs  became  aware  that  we  were 
shipping  these  TOW  missiles  to  Iran? 

A    No,  sir,  I  don't.   When  I  left  in  June,  if  you  had 
asked  me  at  that  time,  I  would  have  said  that  I'm  not  even 
aware  that  he  is  aware  of  it.   Again,  the  list  in  the 





1  Defense  Department  that  I  knew  about  was  so  small  you  could 

2  have  fit  it  on  half  a  piece  of  paper  in  terms  of  everybody 

3  that  I  knew  that  was  involved. 

4  Q    For  the  record,  when  you  left  in  June  he  didn't 

5  know  about  it. 

6  A    Okay.   That's  what  I  would  have  told  you  if  you'd 

7  asked  me,  and  I  didn't  think  you  did. 

8  Q    When  these  matters  became  public,  who  within  DoD 

9  did  you  talk  to,  or  were  you  asked  to  brief,  of  whatever? 

10  A    The  fellow  that  called  me  was  the  aide  to  Gen. 

11  Kicklighter,  and  he  called  me  at  home. 

12  Q    And  who  is  Gen.  Kicklighter? 

13  A    He  is  currently  Gen.  Russo's  successor.   The's  the 

14  Assistant  Deputy  Chief  of  Staff  for  Logistics,  and 

15  designated  as  the  new  Director  of  the  Army  Staff. 

16  Q    And  did  you  ever  speak  to  Richard  Armitage,  the 

17  Assistant  Secretary  of  Defense? 

18  A    No,  sir,  I  did  not.   I  have  never  spoken  to  him  in 

19  my  entire  career. 

20  Q    I  believe  you  told  us  in  April  that  you  were  later 

21  seen  by  agents  of  the  FBI,  and  the  investigators  conducting 

22  the  Inspector  General's  investigation? 

23  A    That  is  true;  yes,  sir. 

24  Q    Did  you  testify  before  the  Tower  Commission  Boa